You are considering purchasing a stock immediately for $1548.If you purchase the stock, you plan on holding the stock for 5 years. The stock price in each year obeys the following equation: XIn)...
23. Today, you are purchasing 100 shares of stock on margin. The purchase price per share is $35. The initial margin requirement is 70 percent and the maintenance margin is 30 percent. The call money rate is 4.5 percent and you are charged 1.6 percent over that rate. What will your rate of return be if you sell your shares one year from now for $37 a share? Ignore dividends. A. 5.55 percent B. 6.42 percent C. 7.18 percent D....
Question 5 (10 points) Suppose you believe that Du Pont's stock price is going to decline from its current level of $ 82.09 sometime during the next 5 months. For $ 717.05 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $ 84 per share. If you bought a 100-share contract for $ 717.05 and Du Pont's stock price actually changed to $ 70.62 , your net profit (or loss)...
You hold 1000 shares of Rusty Company and each is worth $5. You paid $1 for each share several years ago. You anticipate its stock price will increase by 10% per year. You would like to sell your Rusty Company stock and buy Geeky, Inc. stock with the proceeds because you see even more upside for Geeky, Inc. How fast must Geeky, Inc. stock grow for you to be indifferent (after-tax) between: (a) holding Rusty Company stock and doing nothing...
Your broker offers to sell you some shares of Bahnsen & Co. common stock that paid a dividend of $2.75 yesterday. Bahnsen's dividend is expected to grow at 8% per year for the next 3 years. If you buy the stock, you plan to hold it for 3 years and then sell it. The appropriate discount rate is 11%. Find the expected dividend for each of the next 3 years; that is, calculate D1, D2, and D3. Note that D0...
2. You purchase the following discount bonds with varying maturities. Initial Price Cash Next Year Return Bond А B E F G H J Maturity 2 years 3 years 5 years 2 years 3 years 5 years 2 years 3 years 5 years Face Value 5,000 5,000 5,000 10.000 10.000 10.000 20.000 20.000 20,000 (a) Assume an initial interest rate of 5%. Calculate the present value of each bond. (This is the initial market price for each instrument, this is...
82% Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Power Corporation stock or E-shop Company stock and have assembled the following data for the two companies. EEB (Click the icon to view the income statement data.) B(Click the icon to view data at end of current year) 圈(Click the icon to view data at beginning of current year) Your strategy is to invest in companies that have low price-earnings ratios but...
. You expect to receive the following payments: end of year 1 $10,000 2 $10,000 3 $10,000 4 $10,000 You plan to invest these payments in stock funds. If your investments earn 10% per year, how much will you have at the end of the 20th year? a) $46,410 b) $213,253 c) $193,866 d) $234,578 e) $31,699 . Your neighbor Bob has two annuities. The first annuity will pay him $10,000 per month for the next 10 years. The second...
1. You expect to receive the following payments: end of year 1 $10,000 2 $10,000 3 $10,000 4 $10,000 You plan to invest these payments in stock funds. If your investments earn 9% per year, how much will you have at the end of the 15th year? a) $166,574 b) $108,261 c) $118,005 d) $152,820 e) $128,625 2. Your neighbor Bob has two annuities. The first annuity will pay him $10,000 per month for the next 10 years. The second...