Question: Q.5 i. ii. iii. Q.6 What are the key elements in the Efficient Markets Hypothesis? Explain how two key financial ratios are typically used

Q.5 i. ii. iii. Q.6 What are the key elements in the Efficient Markets Hypothesis? Explain how two key financial ratios are typically used in valuing equities. Explain the strengths and limitations of discounted dividend approaches to valuing equities. i. Explain the basic elements of buying and selling call options.. ii. iii. Q.7 Explain, using numeric data, the payoffs and profits for a call option on an equity. Suppose you buy a put option on Blake Plc on 30th April 2024. The option cost 10, expires on 30th June 2024, and has an exercise price of 95. Explain the circumstances in which you would/would not exercise the option. i. Explain the basic mechanics of a forward transaction. ii. iii. Q.8 i. ii. iii. Explain how a futures exchange operates as a clearinghouse for traders. Explain, with some numeric data, the mechanics of a short hedge in the futures markets, its limitations. Explain how to calculate the mean and variance of a portfolio of two risky assets. Explain and illustrate, for portfolio of two risky assets, the portfolio opportunity set, and the portfolio efficient frontier. Explain how you would calculate the minimum variance portfolio in this two-asset case. Z

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