Which of the following is true when dividends are expected?
A. Put-call parity does not hold
B. The basic put-call parity formula can be adjusted by subtracting the present value of expected dividends from the stock price
C. The basic put-call parity formula can be adjusted by adding the present value of expected dividends to the stock price
D. The basic put-call parity formula can be adjusted by subtracting the dividend yield from the interest rate
B
Put call parity still holds for European options providing the present value of the dividends is subtracted from the stock price.
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Assume your current mortgage payment is $900 per month. If you begin to pay $1,000 per month (with the extra $100 per month going to principal), which of the following will be TRUE?
A) The mortgage balance will decrease faster with $1,000 monthly payment compared to $900 monthly payments. B) The total amount paid (principal and interest) will increase with $1,000 monthly payment compared to $900 monthly payments. C) The total interest expense will increase with $1,000 monthly payment compared to $900 monthly payments. D) The total principal paid will decrease with $1,000 monthly payment compared to $900 monthly payments.
Snype, Inc. has an accounts receivable turnover ratio of 7.3. Stork Company has an accounts receivable turnover ratio of 5.0. Which of the following statements is correct?
A) Snype's average collection period is less than Stork's. B) Stork's average collection period is less than Snype's. C) Snype has a lower accounts receivable account on average than does Stork Company. D) Stork Company has (on average) a lower accounts receivable account than does Snype.