Question

If Trader Joanne opened her position by buying 100 shares of Nugget Inc., how can she close her position?

Group of answer choices

After consulting Trader Joe, she will close by taking another long position for 100 shares of Nugget Inc.

After consulting with Assistant Joe, she will close by shorting 50 shares of Nugget Inc.

After consulting with Advisor Joe, she will close by selling 100 shares of Nugget Inc.

She decides to not consult with anyone and will close by waiting for the option to expire.

She decides to not consult with anyone and will close by buying 1 call option.

What is the value at risk if analysts estimate that there may be three standard deviations of returns in a given year? Assume that the mean return is 7% and the standard deviation is 3%.

Group of answer choices

-8%

-1%

-2%

-4%

-6%

Suppose you own Nugget Gold ETF that has a mean return of 5% and a standard deviation of 6%. What is the approximate probability of a return of -1% or worse in a year?

Group of answer choices

8%

16%

32%

40%

48%

What is the predicted y-value if y=α+βx where α is equal to 0.0215, β is equal to 1.0101, and x is equal to 1%? Assume that the p-values for α and β are 0.0021 and 0.0432, respectively.

Group of answer choices

0.0316

0.0025

1.0316

0.0219

0.0453

Answer 1

Q-1)

When you buy a share to close the position, you have to sell the share. Hence the correct answer is

After consulting with Advisor Joe, she will close by selling 100 shares of Nugget Inc.

The first option is not correct because if he is taking long position, It will be added to the existing position, not closing of the position will happen. The shorting the share would be treated as a separate position if it is allowed to do so in the same account. The equity does not expire, there is no expiry date on which this will expire. Buying a call option will not really close the position, it would be treated as a new position in option.