a. Calculate the initial value of the index if a price-weighting scheme is used. Index value b. What is the rate of return on this index for the year ending December 31, 2022? For the year ending December 31, 2023?

a. Calculate the initial value of the index if a price-weighting scheme is used. Index value b. What is the rate of return on this index for the year ending December 31, 2022? For the year ending December 31, 2023?

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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A stock price P0=$23, and is expected to pay D1 = $1.242 one year from now and to grow at a constant rate of g=8% in the future. Suppose this analysis was conducted in January 1, 2002, what is the expected price at the end of 2002 and what is the Capital gains yield?
You had the following rates of return for on your portfolio for the last four years: 2019: -10.1%2020: 15.4%2021: 7.3%2022: 12.8%Calculate the geometric average return on your portfolio. Enter your answer as a decimal, rounded to four decimal places.
The price of a stock was $45 at the beginning of 2019. If it showed a return of 8% at the end of 2019 and is projected to show a return of 14% at the end of 2020, what should the stock price be at the end of 2020?
9. 10. Use the information below and the P/E as an Earnings Multiplier Model to find this stock's intrinsic value and determine whether it's over or under valued if its current price is $71.32. 2020 2021 2022 2023 2024 61.57 39.25 60.93 73.70 9.70 4.56 26.68 6.80 1.34 16.52 4.30 7.00 .60 .70 .80 .65 39.55 45.00 95.00 93.00 97.19 15.0 Bold figures are 21 .86 Value Line estimates 1.1% 1.2% 50 .80 64 76.35 70.79 124.24 107.76 37.7 3.9 1.94 1.2% VALUE LINE PUB. LLC 77.95 Revenues per sh 11.70 "Cash Flow" per sh 8.50 Earnings per sh A .88 Div'ds Decl'd per sh C .65 Cap'l Spending per sh 51.35 Book Value per sh Common Shs Outst'g B Avg Ann'l P/E Ratio Relative P/E Ratio Avg Ann'l Div'd Yield A stock selling for $20 has an intrinsic value of $10. Is it over or under valued?
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Please fast step by step full solution
a) If the dividend yield is 1.40% annualized, the interest rate is -0.10% annualized, and the index is trading at 28, 144 today, what is the expected price of a 6-month forward? 28, 144e(-0.001 -0.0140)*0.50 = 27,961.66 b ) The 6-month forward is currently quoted at 28,000. Using the information above and the grid below, show how you would arbitrage this index profitably. Be sure to indicate whether each transaction is long or short ( buy or sell) and to include (+) and (-) signs on your cash flows. Use 0 decimals (whole numbers only) in your answers. Transaction Time 0 cash flows Time t cash flows Totals:
For Finance class: What are the equations to use for end-of-year price per share? Turnover rate? Annual rate of return? rate of return with load expenses and multiple years?
3. A stock has a 15 percent change of moving either up or down per period and is currently priced at $25. Using a one period binomial model, and assuming that the risk-free rate is 10 percent, complete the following. a. Determine the possible stock prices at the end of the first period. b. Calculate the intrinsic values at expiration of an at-the-money European call option. c. Find the value of the option today. d. Construct a hedge by combining a position in stock with a position in the call. Show that the return on the hedge is the risk-free rate regardless of the outcome, assuming that the call sells for the value you obtained in c. e. Determine the rate of return from a riskless hedge if the call is selling for $3.50 when the hedge is initiated.
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One month ago you purchased a put option on the S&P500 Index with an exercise price of $900.00. Today is the expiration date, and the index is at $896.46. a. Will you exercise the option? b. What will be your profit?

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