Can a persone with ration expectations after reading the newspaper. Expect the price of a share...
Can a persone with ration expectations after reading the newspaper. Expect the price of a share of google to rise by 20% in the next week?
Homework Answers
Yes, rational expectations imply that an individual takes into all available information to form his future expectations rather than just forming the expectations based on the past behaviour or trends that had occurred in the past .
So after reading newspaper, an individual can collect all relevant information to conclude that Google price share can rise by 20%
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Can a persone with ration expectations after reading the
newspaper. Expect the price of a share...
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Question 4 - (20 Points) You are a broker and you think that the Google share...
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Question 4 - (20 Points) You are a broker and you think that the Google share price will rise in the next three months. The current price of 1 Google share is $55. A 3-month European call options on Google shares with a strike price $58 are currently selling for $2.75. Each option contract is written on 100 shares. You have to choose your investment, between buying 50 shares and buying 1000 call options. Both strategies involve an investment of...
Question 4 - (20 Points) You are a broker and you think that the Google share price will rise in the next three months. The current price of 1 Google share is $55. A 3-month European call options on Google shares with a strike price of $58 are currently selling for $2.75. Each option contract is written on 100 shares. You have to choose your investment, between buying 50 shares and buying 1000 call options. Both strategies involve an investment...
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