Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Problem #1
Suppose you bought 100 shares of stock at an initial price of $73 per share. The stock paid a dividend of $0.88 per share during the following year, and the share price at the end of the year was $82.
Compute your total dollar return on this investment.
Does your answer change if you keep the stock instead of selling it? Why or why not?

Problem #2
Looking back at Problem 12, suppose the call money rate is 6% and your broker charges you a spread of 1.25% over this rate. You hold the stock for six months and sell at a price of $53 per share. The company paid a dividend of $.25 per share the day before you sold your stock. What is your total dollar return from this investment? What is your effective annual rate of return?

Problem #3
You purchase 10 call option contracts with a strike price of $75 and a premium of $4.05. If the stock price at expiration is $83.61,
what is your dollar profit?
What if the stock price is $69.56?

Problem #4
You are going to invest in a stock mutual fund with a 5% front- end load and a 1.30% expense ratio. You also can invest in a money market mutual fund with a 5.2% return and an expense ratio of .20%.
If you plan to keep your investment for two years, what annual return must the stock mutual fund earn to exceed an investment in the money market fund?
What if your investment horizon is 10 years?

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M927154

Have any Question? 


Related Questions in Basic Finance

1 describe how and why a bonds interest rate risk is

1. Describe how and why a bond's interest rate risk is related to its maturity. 2. Explain why municipal bonds can offer lower interest rates than equally risky corporate bonds. 3. Explain why the yield to maturity on a ...

Comprehensive problemuse what you have learned about the

Comprehensive Problem Use what you have learned about the time value of money to analyze each of the following decisions: Decision #1: Which set of Cash Flows is worth more now? Assume that your grandmother wants to give ...

Discuss the differences between using 1 a terminal cap rate

Discuss the differences between using (1) a terminal cap rate and (2) an appreciation rate in property value when estimating reversion values.

Compare and contrast the physical and risk characteristics

Compare and contrast the physical and risk characteristics of Treasury debt securities with municipal securities. What are the advantages and disadvantages of each for the borrower? What are the advantages and disadvanta ...

A very thin polymeric coating of thickness 01 mm uniformly

A very thin polymeric coating of thickness 0.1 mm uniformly coats a rectangular surface. The rectangular surface has a length of 20 cm and a width of 10 cm. the coating contains a solvent that must be evaporated away fro ...

1 what factors must one consider when deciding on the

1. What factors must one consider when deciding on the appropriate underlying asset for a hedge? 2. For each of the following hedge termination dates, identify the appropriate contract expiration. Assume the available ex ...

1 the value of common stocks cannot be tied to the present

1. The value of common stocks cannot be tied to the present value of future dividends because most firms don't pay dividends. Comment on the validity, or lack thereof, of this statement. 2. A common fallacy in stock mark ...

Name at least four factors which can reduce in-service

Name at least four factors which can reduce in-service clamping force ? Name at least three factors which can be prevented or at least reduced by sufficient in-service clamping force ? Name at least four factors which de ...

Esthers egg farm is constructing its pro forma financial

Esther's Egg Farm is constructing its pro forma financial statements for this year. At year end, assets were $500,000 and accounts Payable were $125,000, Notes payable $100,000. Long-Term Debt is $37,000. Last year's sal ...

1 why should researchers never use the one-group

1. Why should researchers never use the one-group pretest-posttest design? 2. What threats to internal validity are present when the nonequivalent control group posttest-only design is used? Which of these threats are el ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen