17) Quentin purchased 600 shares of stock on margin for $25.38 a share and sold the sharesseven months later for $30.39 a share. The initial margin requirement was 70% and themaintenance margin was 30%. The interest rate on the margin loan was 4.5%. He received nodividend income. What was his holding period return?A) 9.05%B) 9.45%C) 11.46%D) 12.67%E) 27.09%

Step 1: Given that, Number of shares purchased = 600 Purchase price per share = $25.38 Selling price…

Answered: 17) Quentin purchased 600 shares of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Michael’s, Inc. just paid $1.80 to their shareholders as the annual dividend. Simultaneously, the company announced that future dividends would be increasing by 5.0 percent forever. If you require an 4 percent rate of return, how much are you willing to pay to purchase one share of Michael’s stock?
Suppose you have $10,000 in cash to invest. You decide to sell short $5000 worth of Earlham stock and invest the proceeds from your short sale, plus your $10,000 into one-year U.S. Treasury bills earning 5%. At the end of the year, you decide to liquidate your portfolio. Earlham Industries was priced at $40 per share at the beginning of the year. At the end of the year, Earlham Industries paid a dividend of $1 per share and the share price was $50. The return on your portfolio is closest to: 12.25% -6.25% -2.5% 5%
STL inc will pay a $75 per dividend next year, followed by a last dividend of $30 per share in the year after. Sue has 50 shares in STL Inc. She wishes to limit her income from investments to no more than $35 in the first year. how can she achieve this goal through homemade dividends if the required return on STL Inc’s shares is 9%. What will Sue’s earnings be in the second year?
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Janice V. bought a 5% $1000 twenty-year bond for $925. She received a semiannual dividend for 8 years, then sold it immediately after the 16th dividend for $800. What rate of return did she make (a) per semiannual period, and (b) per year (nominal)?
An investor spends $25,000 for corporate bonds of another company late in Year One. The bonds are worth $26,000 at the end of that year on the open market. Early in Year Two, $1,300 in interest is received from this investment. Shortly thereafter, the debt investment is sold for $27,000. If this asset is an investment in trading debt securities, what is the impact on net income in Year Two? O Increase by $4,300. O Increase by $3,300. O Increase by $1,300. O Increase by $2,300.
Steven purchased 1000 shares of a certain stock for $25,700 (including commissions). He sold the shares 2 years later and received $33,400 after deducting commissions. Find the effective annual rate of return on his investment over the 2-year period. (Round your answer to two decimal places.) %/year
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Joe Jay purchased a new colonial home for $260,000, putting down 20%. He decided to use Loyal Bank for his mortgage. They were offering a 6 1/2% for a 25-year mortgage. The principal after the first payment had a balance outstanding of: Multiple Choice $259,652.79 $207,722.24 $206,595.57 $258,244.46
Paul sells a stock short for $50.76 per share and buys it back 1 year later for $54.99 after he covers a $2.81 per share dividend. What is Paul’s total return on this investment? (Round answer to 2 decimal places (e.g., 36.45). Use a negative sign for a negative return.)
Today, Andrew sold 3,600 shares of Colts stock for $26.60 per share. Andrew paid $101,124 for the 3,600 shares one year ago. What is the total return on this investment if the dividend yield is 1.90%? Group of answer choices -3.98% -3.40% -2.29%-3.40%
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