John invested $12.000 in the stock of Hyper Cyber. Eight years later, Hyper Cyber's shares reachedS125,000, but John held onto the shares in the belief that their price would double in the next five years.Unfortunately, Hyper Cyber did not double. Rather the market value of John's shares today is $4,000. If theshares were sold and the proceeds invested in another investment, they would likely eam 5% per annum.Which of the following terms and values is correct?• A S2000 is the opportunity cost• B. S125,000 is the opportunity cost of selling the shares today• C S250,000 is the opportunity cost• D. $12,000 is a sunk cost

Financial Management: Financial management comprises of two words i.e. Finance and management.…

John invested $12.000 in the stock of Hyper Cyber. Eight years later, Hyper Cyber's shares reached $125,000, but John held onto the shares in the belief that their price would double in the next five years. Unfortunately, Hyper Cyber did not double. Rather the market value of John's shares today is S4.000. If the shares were sold and the proceeds invested in another investment, they would likely earn 5% per annum. Which of the following terms and values is correct? • A S2000 is the opportunity cost • . $125,000 is the opportunity cost of selling the shares today • C S250,000 is the opportunity cost • D. $12,000 is a sunk cost

John invested $12.000 in the stock of Hyper Cyber. Eight years later, Hyper Cyber's shares reached $125,000, but John held onto the shares in the belief that their price would double in the next five years. Unfortunately, Hyper Cyber did not double. Rather the market value of John's shares today is S4.000. If the shares were sold and the proceeds invested in another investment, they would likely earn 5% per annum. Which of the following terms and values is correct? • A S2000 is the opportunity cost • . $125,000 is the opportunity cost of selling the shares today • C S250,000 is the opportunity cost • D. $12,000 is a sunk cost

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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