Answered: deducted from year-end asset values.…

deducted from year-end asset values. What is your rate of return on the fund if you sell your shares at the end of the year? Select the answer closest to the correct return.

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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If an investor buys shares in a no-load mutual fund for $40 and after eight years the shares appreciate to $57, what is (1) the percentage return and (2) the annual compound rate of return using time value of money? Round your answers to two decimal places. Percentage return: % The annual compound rate of return: %
Consider an example. Assume a share of preferred stock with the following characteristics: Par value $100 Dividend rate 3.0% per year Payment schedule semiannual Maturity date You are analyzing this preferred stock for possible purchase. Your required rate of return on this stock is 5% per year, compounded semiannually. Draw a time line showing the expected dividends for this preferred stock. Calculate the value of this preferred stock based on the required rate of return. Assume that the current market price for this preferred stock is $75 per share. Calculate the expected return based on the market price. Should you invest in the stock? Why or why not? Be sure to use your results from BOTH parts B and C above. You are analyzing a share of XYZ…
Treasury stock should be reported Group of answer choices in the Investments and Funds section of the balance sheet. as a deduction from total stockholders’ equity on the balance sheet. as a current asset only if it will be sold within the next year or the operating cycle, whichever is longer. as a current asset only if it will be sold within the next year or the operating cycle, whichever is shorter.
By investing in a particular stock, a person can make a profit in one year of $3900 with probability 0.4 or take a loss of $800 with probability 0.6. What is this person's expected gain?
If net present values are used to evaluate two investments that have equal costs and equal total cash flows, the one with more cash flows in the latter years has the higher net present value. OTrue O False
4. Expected dividends as a basis for stock values The following graph shows the value of a stock's dividends over time. The stock's current dividend is $1.00 per share, and dividends are expected to grow at a constant rate of 3.50% per year. The intrinsic value of a stock should equal the sum of the present value (PV) of all of the dividends that a stock is supposed to pay in the future, but many people find it difficult to imagine adding up an infinite number of dividends, Calculate the present value (PV) of the dividend paid today (De) and the discounted value of the dividends expected to be paid 10, 20, and 50 years from now (Dio, Dao, Duo). Assume that the stock's required return (r.) is 10.40%. Note: Carry and round the calculations to four decimal places. Time Period Now End of Year 10 End of Year 20 End of Year 50 Dividend's Expected Future Value Dividend's Expected Present Value Using the orange curve (square symbols), plot the present value of each of the expected future…
You already submitted an Investment Proposal. The second part of your Investment Project is a follow-up of your Investment Proposal, with a short reflection essay about the securities you recommended in your Investment proposal. You have to provide an updated Table showing your portfolio. Make sure to include the gain or losses of each individual securities, your total holding-period return, and the effective annual rate (EAR). You should include in the analysis at least one of the securities you recommended to buy in your first report. How did it go? Did it go as planned? Why do you think it did not go as planned? You may also analyze some of your winners and losers in your portfolio (they could be others than the ones you justified in the first report). Any regrets? What would you have done differently after what you have learned in this course? There is no unique way to do a reflection essay. What are in your opinion the essential lessons from this course? The length of the…
Calculate the total cost (in $), proceeds (in $), total gain (or loss) (in $), and return on investment for the mutual fund investment. The offer price is the purchase price of the shares, and the net asset value is the price at which the shares were later sold. (Round your return on investment to one decimal place.) Shares OfferPrice TotalCost Net AssetValue Proceeds Per ShareDividends Total Gain(or Loss) Return onInvestment% 500 $10.60 $ $12.80 $ $0.65 $ %
Benefits of diversification. Sally Rogers has decided to invest her wealth equally across the following three assets: E. What are her expected returns and the risk from her investment in the three assets? How do they compare with investing in asset M alone? Hint: Find the standard deviations of asset M and of the portfolio equally invested in assets M, N, and O. What is the expected return of investing equally in all three assets M, N, and O? % (Round to two decimal places.)
Quarterly Rates of return are calculated for all properties included in the index and are based on Which two distinct components of return?
Investor has had the following returns in the Magic Fund for the past 4 years: 15%, 25%, -30%, 18%. c) State whether the annual geometric return (assume positive) should be higher, lower, or the same as the annual arithmetic return. Neither calculation nor explanation is necessary. d) State which measure, annual arithmetic return or annual geometric return, better represents how an investment performed over time. Neither calculation nor explanation is necessary.
In the following exercise, separate the investments according to the type of Keynesian demand they are: Transactions (0% to 5%), Precautionary (6% to 9%), and Speculative demand (greater than 10%). Investment in each category has the same risk. So you want to invest in the highest return for the same risk. Take each demand type and choose the highest return and put that amount into the investment. For example, if Bond fund A has a return of 4% and Fund B has a return of 5%, they have the same risk, so you would put $70 into bond fund B. You have the following investments Opportunities ad returns. Fidelity Bonds 11% Fidelity Magellan 9% Putman Bonds one 4% Putman bonds Two 12% Growth Stock One 15% Growth and Income 8% Income Fund 3% Putman Growth…

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