- Consider a world with two periods t = 0, 1, perfect capital markets and no uncertainty. Samantha and Watson have each inherited 50% of the shares of the Nova Corporation from their parents who founded the company. This is the only wealth they have, i.e. the only payments they receive at dates 0 and 1 are from the Nova Corporation. Suppose initially that they can lend and borrow as much as they like at the bank at 11 percent. The Nova Corporation has $10 million on hand to undertake investments. It has 4 projects available to it. The costs at date 0 and payoffs at datel are Suwn below. - Pro'ecm Suppose that at date 0 the Nova Corporation pay all that is left over from the $10 million after undertaking the r_igm projects (by maximizing NPV). At date 1 it pays out all the payoffs om these projects. How much can Samantha consume at date 1 if she consumes $2 million at date 0? A. Samantha's date 1 consumption is $3,355,000 B. Samantha's date 1 consumption is $3,394,050 C. Samantha's date 1 consumption is $1,355,000 D. Samantha's date 1 consumption is $6,710,000 - The chart below shows the prices on two consecutive days for Wal-Mart, a component stock of the Dow Jones Industrial Average. The chart also shows the sum of the 30 stock prices on each of the days. Use this price information to answer the following questions. (Hint: the PWI is calculated as the adjusted average price) 24.47 30 s fP ' Z P- um o rices( i=0 1) 1505.74 1469.29 The Dow Jones Industrial Average closed at a value of 12,240.01 on day 2', based on a divisor of 0. 1230179. On day t+1, Wal-Mart (WMT) experiences a 2-for-1 stock split. Calculate the return on the Dow Jones Industrial Average from day t to day t+1. A. 0.687% B. -0. 786% C. -7.68% D. 0.12099173