1. Which of the following variables does NOT affect the value of a stock option?

The predicted future price of the underlying stock

The current price of the underlying stock

The option's time to maturity

The option's strike price The interest rate

2. Which one of the following statements is true?

Equity securities offer fixed claims on future cash payouts.

Unlike bondholders, for their returns, shareholders rely entirely on price appreciation.

In theory, common shareholders exercise very little control over company decisions.

Historically, common shareholders have earned a risk premium as compensation for risk borne in excess of government bonds.

Preferred shareholders are the first investors to be repaid in bankruptcy liquidation.

3. Which of the following factors, when increased, will tend to cause the value of a put to decrease (all else equal)?

The expected volatility of the underlying stock

The price of the underlying stock

The time to maturity

The strike price

4.Which one of the following accurately orders the rate of return on financial securities from highest to lowest over most of recorded market history (the 1928-2016 period)?

Short-term government bills, long-term corporate bonds, long-term government bonds, common stocks

Long-term corporate bonds, long-term government bonds, common stocks, short-term government bills

Common stocks, long-term government bonds, long-term corporate bonds, short-term government bills

Common stocks, long-term corporate bonds, long-term government bonds, short-term government bills

Long-term corporate bonds, common stocks, short-term government bills, long-term government bonds