Assume a Two-Period World with a Current Share Price of $21.00,an

question 37

Multiple Choice

Assume a two-period world with a current share price of $21.00,an interest rate of 6.5% over the period,a price increase factor of 1.43 and a price decrease factor of 0.55.What are the possible end-of-period prices?

• A) \( \$ 18.70 \) and \( \$ 8.71 \)
• B) \( \$ 21.25 \) and \( \$ 9.64 \)
• C) \( \$ 22.61 \) and \( \$ 10.78 \)
• D) \( \$ 30.03 \) and \( \$ 11.55 \)

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Definitions:

Profits Decrease

A reduction in the financial gains achieved by a business or investment over a specific period.

Unemployment

The condition of being jobless among individuals who are actively seeking work.

Economic Indicators

These are statistical metrics used to measure the growth, health, and stability of an economy, including GDP, inflation rates, and unemployment figures.

Currency Risk

The risk of loss from fluctuations in foreign exchange rates when investing in foreign currencies or overseas assets.