Your Questions About Money Making Stocks For 2010

Steven asks…

Economics class questions?

1.Tiger Woods cheats on his wife. The opportunity cost of this decision is:
A.Loss of endorsements
B.Loss of his wife
C.Huge divorce settlement
D.All of the above

2.Rachel decides to take a road trip to MSU instead of studying for her economics exam. The opportunity cost of this decision is
A.Travel expenses
B.Having a great time with her friends.
C.A poor grade in her class.
D.All of the above
E.Answer A and C

3.Amber quits her job paying $50,000 per year in order to go to medical school. The opportunity cost of this decision is
A.$50,000 worth of goods and services.
B.The money she spends on tuition for medical school.
C.The difference between the money she earns as a doctor and the cost of attending medical school
D.Answers A and B

4.Doug calls in sick to his job and decides to spend the day going to a concert at DTE. The opportunity cost of this decision is
A.The money spent on gas, food, drinks, and the concert tickets
B.A smaller paycheck next week from working fewer hours.
C.The difference between the benefit Doug received from attending the concert and the costs involved from attending it.
D.Both A and B.

5.An OCC student must decide whether to purchase tickets to an Eminem concert or a Kid Rock concert. This topic would be discussed in a ____ class.
A.macroeconomics
B.physics
C.engineering
D.microeconomics

6.The impact of President Obama’s stimulus package on economic growth. This topic would be discussed in a ____ course.
A.gym
B.microeconomics
C.physics
D.macroeconomics

7.Apple must decide what price to charge its customers for the I-Pad 2. This topic might be discussed in a ____ course.
A.French
B.microeconomics
C.macroeconomics
D.biology

8.A news article states that the most recent recession is over. That topic might be discussed in a ____ course.
A.macroeconomics
B.microbiology
C.microeconomics
D.math

9.Michigan’s unemployment rate was 12.4% in November, 2010. This is an example of a ___ statement.
A.microeconomic
B.positive
C.cause and effect
D.normative

10.The federal government needs to reinstate the Cash for Clunkers program in order to help the struggling economy. This is an example of a ___ statement
A.normative
B.cause and effect
C.positive
D.microeconomics

11.Congress should repeal the Health Care Reform Act because it is too costly. This is an example of a ____ statement.
Anormative
Bpositive
Ccause and effect
Dwacky

12.The stock market rose 20% over the last 4 months. This is an example of a ___ statement.
A.positive
B.normative
C.opinionated
D.microeconomics

I think I know the answers for the most of the question and they must be right answers. I just want to make sure I got them all right.
Thank you for your help, guys!

John answers:

An economics student is soliciting help with his/her homework, instead of doing his/her own work. S/he is:

A. Losing the opportunity costs of actually learning economics.
B. Turning his/her tuition dollars into sunk costs.
C. Diluting the value of his/her degree.
D. Soliciting advice for which s/he is giving no economic incentive to respond, yet anticipates results greater than the value of the incentive given, which is, we’ll say, limited.
E. Committing an academic falsehood on a micro level.
F. Probably occupying (insert name of locale here) when s/he should be occupying his/her own economic class.
G. Disappointing the invisible hand.
H. At least pleasantly surprising this reader that your professor hasn’t started spouting crap about Keynes yet.
I. Wishing this reader had the opportunity to short this student’s job prospects in his/her personal future’s market.
J. Is not the student but rather the professor, who lost the answer key.
K. All of the above.

Thomas asks…

Does this call option scenario sound correct? Please let me know if i have this correct…?

I buy 10,000 $2.00 call options for December 12, 2010 at .10 cents a piece. That means I’m paying $1000 for these $10,000 call options. If by 12/12/10 the stock price has not reached $2.00, the call expires and i lose all $1000 and the transaction is over. If by 12/12/10 the stock price has reached $3.00, i have the option of buying the 10,000 shares at $2.00 per share even though they are already at $3.00.

Does this all sound correct? Also, since i do not have to purchase the calls, what are my options if the calls become “in the money” or over $2.00. Can i just buy a portion of the shares? Do i have to buy them or can i just sell them at a discount to someone else that wants to buy for less than the $3.00 they have already reached? Meaning, i can buy 10,000 shares at $2.00, but i pass on this and just sell the shares for $2.75 to make a .75 profit on each share minus the .10 i paid at the beginning.

Any help is appreciated! Thanks!

John answers:

I suppose you mean “Also, since i do not have to EXERCISE the calls…” instead of “Also, since i do not have to purchase the calls”, right? I suppose so because you obviously know you have to buy the call options in the first paragraph of your question.

Now, it is true that you don’t have to exercise the call options to take profit. To take profit on call options, all you have to do is to sell it at the higher price whenever you want to. In fact, doing so allows you to recover some of the extrinsic value in the option which becomes immediately zero if you exercise them. This means that you will exactly make MORE PROFIT by selling the call options directly rather than exercising it and then selling the stock. Another drawback of trying to exercise and then sell the stock is that the stock price might have gone down a little bit by the time your exercise is completed and ready for your sell order! There again you would have made lower profits.

This is why 85% of all options contracts goes unexercised. Most of them are closed way before expiration.

Sandra asks…

I’m almost 22. Is keeping this job as my career a good idea?

I work at a grocery store. I got hired in 2009, one month before I turned 18. I was trained immediately for the service desk, and I love it. In 2010, I was cross-trained as a cashier, but 95% of the time I was at the desk. Other employees would ask me which I liked better, and I would refer to the desk as “my home”. I love it, because there is more customer interaction, more clerical work, and the job is centered around helping others. In November 2011, I asked to be promoted to “CSR”, meaning I was in charge of the front end. In other words, I supervise the cashiers, make sure all customers are cared for, and make sure the “department” is running smooth. There are other tasks that come along with it too, but you get the idea. I still work at the desk, but I now am trained for 3 positions. And the employees listen to me. I’m good at what I do. I love it, and look forward to work each day. My managers love me, each and every one. I am in college now, but I’m not satified. I could work here for the rest of my life, and be more than happy with it. I started college in 2008, withdrew in ’10…went back in ’11, withdrew later that year…went back this Jan…and I’m about to withdraw. Again. I can’t take school. I hate it. I don’t know what I want to do. I know that I LOVE my job. It may not pay well now, but I’ve already got one promotion, and that only took me 2.5yrs. Happiness is more important than money. But I also know I need to be realistic. I don’t know what to do. My GPA is plummeting…and I’m not staying in school.

So you think staying where I am is an good idea? All of the managers here started in other departments. The store directers started in the grocery department, stocking! I really need some advice. I’ve been thinking about this for months now, and I’m still unsure. I know what I want to do. I just don’t know if I should do it. Help please?

John answers:

As Long as your happy. If the money your getting paid is enough and getting you through life. Its fine. If you ever start to feel unhappy. Then it’s time to do something else you’d prefer. Life is all about being happy. Your happy now? Your living life.

Michael asks…

How can I upgrade my stock Impreza to a WRX?

I have a stock 2010 Subaru Impreza, and it is fun but needs some power. So i am trying to find out what i need to put into my car to make it match if not a little better than a WRX.

John answers:

You’d end up spending the same amount of money as you would just buying a new WRX. It’s not worth it, trade up, buy a good base, and start from there.

Richard asks…

How do I deduct 1040 Schedule D loss when my income is less than the exemption?

I lost more than $12000 trading stock on 2010. I have no other income to report on 1040. How do I get some refund on $3000 loss yearly. The exemption on 1040 is higher than $3000, so my income on 1040 is 0 rather than -3000 dollar.

Thanks,
filmp

John answers:

You have to make money to use the tax loss. You don’t lose any of it, it just carries forward until you do. There is no expiration date.

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