6. The investor would pay ask price =245.50
Amount the investor would pay the investor =Number of shares*Ask
Price =10*245.50 =24550
6. If an investor wishes to purchase 100 shares of HEB with a bid price of...
An investor shorts 100 shares of a stock when the share price is $50 and closes out the position one week later when the share price is $48. The stock pays a dividend of $1.5 per share during the week. Assume that the risk free interest rate is zero. How much does the investor gain?
Company ABC has 10,000 shares outstanding and the stock price is $100. The company is expected to pay a dividend of $10 per share next year and thereafter the dividend is expected to grow indefinitely by 6% a year. The company now makes an announcement: It will repurchase shares next year instead of issuing cash dividends. But from year 2 on the payout policy stays the same with cash dividends. (Please check my work A - C, and solve for...
1. Which statement is incorrect? a. Dividend yield measures the rate of return on the market price of a share. b. The dividend payout ratio measures the percentage of profit paid out in dividends to ordinary shareholders. c. Dividend per share is the ratio to use when comparing income from shares with income from alternative investments. d. Dividend yield is an important ratio for an investor who is acquiring shares mainly for income. 2. A profit ratio for a retailer...
Company ABC has 10,000 shares outstanding and the stock price is $100. The company is expected to pay a dividend of $10 per share next year and thereafter the dividend is expected to grow indefinitely by 6% a year. The company now makes an announcement: It will repurchase shares next year instead of issuing cash dividends. But from year 2 on the payout policy stays the same with cash dividends. 1. What is the expected rate of return on the...
A Canadian investor owns 300 shares of Scotiabank (BNS) and wants to protect herself against a large drop in the stock’s price between now and the end of the year. i. Should she buy BNS stock put options or call options? ii. To protect herself with a maximum loss of about 10% below the current market price, what strike price should she choose? iii. What expiry date should she choose? iv. How many contracts would she need to buy? v....
Problem 3.3 An investor purchases an annuity that will pay a constant payment starting today of $100. Beginning with the payment 12 years from today each payment will be 5% greater than the previous payment. The last payment will be received 25 years from today. The annuity is bought to yield an effective interest rate ofi such that 0.85. What is the purchase price of the annuity today?
Feast Inc. has a stock price of $100 and is about to pay a $5 cash dividend. An investor owns 4,000 shares and prefers a $8 cash dividend. How many shares will the investor have to sell to create a “homemade” dividend? Question 6 options: 153 shares 142 shares 127 shares 131 shares Part 2 Suppose Feast Inc. pays a $6 dividend, in which case the investor would not have sold any shares. Assuming no tax implications, what would the...
An investor with a required return of 15 percent for very risky investments in common stock has analyzed three firms and must decide which, if any, to purchase. The information is as follows: Firm A B C Current earnings $ 2.50 $ 2.90 $ 6.80 Current dividend $ 2.20 $ 4.40 $ 7.80 Expected annual growth rate in 5 % 2 % -2 % dividends and earnings Current market price $ 28 $ 39 $ 46 Stock A: $ Stock...
Two years ago, you purchased 100 shares of Coca-Cola Company. Your purchase price was $52 a share, plus a total commission of $35 to purchase the stock. During the last two years, you have received the following dividend amounts: $1.10 per share for the first year and $1.18 per share the second year. Also, assume that at the end of two years, you sold your Coca-Cola stock for $60 a share minus a total commission of $35 to sell the...
In all cases of common stock, the investor wishes to hold the common stock for various holding periods. 1.Calculate the value of a 10-year, non-coupon bond, which has a par value of S 1,000, pays 9% interest, and the investor wants an 11% return. Explain the meaning of your result. 2. Calculate the value of a coupon bond that matures in 11 years, which has an even value of $ 1.000, pays 8% interest and the investor wants a 9%...