Caroline owns 3000 shares of stock in Mousey Corporation. She will receive $3.30 per share dividend in one year. In two years, Mousey will pay a liquidating dividend of $45 per share. The required return on Mousey stock is 12%. Answer these questions: a) What is the current share price of Mousey stock? b) If Caroline would rather have equal dividends in each of the next two years, show how she can accomplish this by creating home dividends! c) If Caroline want only $800 total in dividends the first year. What will her homemade dividend be in two years? d) Explain what is homemade dividend? Does the timing of dividend matters or not? Why!

Caroline owns 3000 shares of stock in Mousey Corporation. She will receive $3.30 per share dividend in one year. In two years, Mousey will pay a liquidating dividend of $45 per share. The required return on Mousey stock is 12%. Answer these questions: a) What is the current share price of Mousey stock? b) If Caroline would rather have equal dividends in each of the next two years, show how she can accomplish this by creating home dividends! c) If Caroline want only $800 total in dividends the first year. What will her homemade dividend be in two years? d) Explain what is homemade dividend? Does the timing of dividend matters or not? Why!

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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What is Rate of Return? Adam is a retail investor and decides to purchase 10 shares of Company A at a per-unit price of $20. Adam holds onto shares of Company A for two years. In that time frame, Company A paid yearly dividends of $1 per share. After holding them for two years, Adam decides to sell all 10 shares of Company A at an ex-dividend price of $25. Adam would like to determine the rate of return during the two years he owned the shares.
Stella plans to purchase 100 shares of a stock (ticker: HOOD) that is currentlytrading at $72 per share. She plans to get a call loan of $4,000 from her long-time broker. Herbroker will charge 2.74% interest on the loan regardless of the length of the loan. If the stockincreases by $10 over the next year, what is the return on her investment for the year?Assume she pays the interest when she returns the loan. Round your answer to two decimalplaces. Use a detailed explanation without excel. A. 13.89%B. 14.67%C. 16.67%D. 27.83%E. 31.25%
Ghaith has bought shares of RIO, Inc. stock for $25.00 per share. He expects a $1.00 dividend at the end of this year. After 2 years, he expects to receive a dividend of $1.25 and to sell the stock for $28.75. What is Ghaith's required rate of return?
you own 1,000 shares of stock in Avondale Corporation. You will receive a $2.30 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $53 per share. The required return on Avondale stock is 15 percent. What is the current share price of your stock (ignoring taxes)? If you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade dividends. Hint: Dividends will be in the form of an annuity. suppose you want only $750 total in dividends the first year. What will your homemade dividend be in two years?
Jessie B. purchases 450 shares of Smooth Sail Inc. for $50 per share at a time when the initial margin requirement is 60%. After two months, seeing that the price of Smooth Sail has fallen to $40 per share, Jessie wishes to buy an additional 200 shares. By this time, the initial margin requirement has gonedown to 50%. Will Jessie be able to do some pyramiding? What is the amount of margin he will be required to provide for his second transaction? Answer the question showing calculations.
You own 1,000 shares of stock in Avondale Corporation. You will receive a $2.30 per-share dividend in one year. In two years, Avondale will pay a liquidating dividend of $53 per share. The required return on Avondale stock is 15 percent. What is the current share price of your stock (ignoring taxes) ? If you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade dividends. Hint : Dividends will be in the form of an annuity Thanks :)
Allan decides to invest in a new company which would allow him to receive $ 250,000 at the end of each year for the next 5 years. He purchases 100,000 shares at the price of $ 6.50. What is the NPV of a single share, if the interest rate is 15% per year?
You are considering acquiring a common share of Sahali Shopping Center Corporation that you would like to hold for 1 year. You expect to receive both $1.25 in dividends and $35 from the sale of the share at the end of the year. The maximum price you would pay for a share today is if you wanted .to earn a 12% return إختر أحد الخيارات $32.37 A $38.47 B $41.32 C $31.25 D
Dr. FMS is interested in buying ordinary shares of Online Exam Ltd. Based oninformation available to her. He estimates that the company will pay the followingdividends in the next five years.He also estimates that at the end of fifth year, she will be able to sell the shares at Rs. 30.What is the maximum price he would pay today if her rate of return for this kind of risk is13%?
Question 6 Answer parts a), b) and c) based on the information below: Kasandra has purchased 1,000 shares in ABC Ltd for $40 each. Her analysis suggests that the following four states of the economy with respective probabilities can affect the price of the share next year. She also expects to receive a dividend of $2 per share next year. States of economy Probability Price Boom 10% $50 Good 30% $48 Normal 40% $42 Recession 20% $30 a) For each scenario above, calculate the total holding period return for Kasandra. Calculate the expected return from this investment considering all scenarios. Round your answer to the nearest 0.01%. b) Calculate the total risk of this investment. Round your answer to the nearest 0.01%. /
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Emily is holding shares of stock A with market value of $100,000 that includes unrealized capital gains of $20,000. Tax rate on realized capital gains is 25%. Stock A is expected to earn annual return of 6.5% in the future. Stock B is expected to earn an 8.7% annual return in the future. What will be the after-tax value of switching to stock B now at the end of the holding period of three more years? Below 109,000 Between 109,000 and 110,500 Between 110,500 and 112,000 Between 112,000 and 113,500 Between 113,500 and 115,000 Above 115,000

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