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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Melissa wanted to buy Apple Inc. stock, which had a price range of $409 to $582 a month later. The current share price is $488. Her broker advises her that the price of this share could rise to $522 within the next month or so, so she should purchase a one-month Call of Apple. To be prudent in purchasing the call, the share price should be greater than or equal to $522, which her broker could not guarantee. Though she understands the market's uncertainty, she wants to know the probability of reaching the share price of $582 so that she can justify purchasing a one-month Call of Apple at the execution price of $522. Take the continuous compounded risk-free interest to be 3.60% p.a. O 0.3789 0.6211 0.5349 0.4651
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%
George recently received a great stock tip from his friend, Mason. George didn’t have any cash on hand to invest, so he decided to take out a $35,000 loan to facilitate the stock acquisition. The loan terms are 8 percent interest with interest-only payments due each year for five years. At the end of the five-year period the entire loan principal is due. When George closed on the loan on April 1, 2020, he decided to invest $28,000 in stock and to use the remaining $7,000 to purchase a four-wheel recreation vehicle. George is unsure how he will treat the interest paid on the $35,000 loan. In 2020, George paid $2,100 interest expense on the loan. (Hint: Visit https://www.irs.gov/ and consider IRS Publication 550.)What amount may he deduct as interest in 2020?
The Board of Directors of CYZ Corporation votes to issue two shares of stock for each share held as a stock dividend to shareholders. Just prior to the dividend, Cheryl owns 100 shares of CYZ Corporation stock that she purchased for $10 per share. She receives 200 new shares as a result of the dividend. How much gross income must Cheryl report as a result of the dividend and what is her stock basis after the dividend?
Stan and Alicia can invest $40000 in preffered stock A which pay a dividend of $2000 a year, payable quarterly. They will re - invest the dividends in a savings account which presently earnes 3% compounded yearly. They expect the stock will reach a selling price of $44000 in 4 years. Assume a regular income marginal tax rate of 43%, and a dividend marginal tax rate of 17.45%, and a capital gains marginal tax rate of 21.5%. What is the after - tax EAR of this tock? Assume taxation is paid annually for the interests and dividends. (Calculate using HPR before and after tax) Ans: 5.72% ( Step by Step solution)
Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share) at the time she started working when the stock price was $6 per share. When the share price was $15 per share, she exercised all of her options. Eighteen months later, she sold all of the shares for $20 per share. What is the amount of Maren's bargain element?
Answer the following question showing all calculations.
Please explain every step. Thank you
At age 35, Ronald earns his MBA and accepts a position as a vice president of an asphalt company. Assume that he will retire at the age of 65, having received an annual salary of $105,000, and that the interest rate is 8%, compounded continuously. a) What is the accumulated present value of his position? b) What is the accumulated future value of his position?
Betty and John Martinez own 140 shares of McDonald's common stock. McDonald's annual dividend is $0.79 per share. What is the amount of the dividend check the Martinez couple will receive for this year? (Round your answer to 2 decimal places.) Annual dividend check amount
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?
J1.

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