Semitool Corp Has an Expected Excess Return of 6% for Next

question 6

Multiple Choice

Semitool Corp has an expected excess return of 6% for next year.However for every unexpected 1% change in the market,Semitool's return responds by a factor of 1.2.Suppose it turns out the economy and the stock market do better than expected by 1.5% and Semitool's products experience more rapid growth than anticipated,pushing up the stock price by another 1%.Based on this information what was Semitool's actual excess return?

• A) 7.00%
• B) 8.50%
• C) 8.80%
• D) 9.25%

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Definitions:

Market Yield

The annual income return on an investment, expressed as a percentage of the market price.

Stock Price

The cost of purchasing a share of a company's stock on the open market.

Black-Scholes Option Pricing Model

The Black-Scholes Option Pricing Model is a mathematical model for valuing the price of European style options, taking into account factors like stock price, exercise price, time to expiration, and volatility.

Black-Scholes Option Pricing Model

A mathematical model used for deriving the theoretical price of European call and put options, factoring in the impact of time, volatility, and other variables.