Johnna owns investment A and 1 share of stock B. The total value of his holdings is $1,507.58. Stock B is expected to pay an annual dividend of $14.28 each year forever, the stock's expected return is 11.59 percent per year, and its next dividend is expected in 1 year. Investment A has an expected return of R and is expected to pay $319.23 per year for a finite number of years such that its first annual payment is expected later today and its last annual payment is expected in 7 years from today. What is R, the expected return for investment A? 16.05% (plus or minus 4 bps) 19.87% (plus or minus 4 bps) O 22.89% (plus or minus 4 bps) O 18.84% (plus or minus 4 bps) the answer cannot be obtained based on the given information

Johnna owns investment A and 1 share of stock B. The total value of his holdings is $1,507.58. Stock B is expected to pay an annual dividend of $14.28 each year forever, the stock's expected return is 11.59 percent per year, and its next dividend is expected in 1 year. Investment A has an expected return of R and is expected to pay $319.23 per year for a finite number of years such that its first annual payment is expected later today and its last annual payment is expected in 7 years from today. What is R, the expected return for investment A? 16.05% (plus or minus 4 bps) 19.87% (plus or minus 4 bps) O 22.89% (plus or minus 4 bps) O 18.84% (plus or minus 4 bps) the answer cannot be obtained based on the given information

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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Ahmed has S2,500 invested at a guaranteed rate of 4.50 percent, compounded annually. What will his investment be worth after fíve years?
Franco plans to invest P1,500 in a mutual fund. If he earns 12% interest compounded monthly, to what amount will his investment grow in 20 years? No peso sign, with comma, no decimal point.
1. Juanita inherits $10,000 and invests it for 30 years at a “net” 9% return. How much money will she have at the end of the period?
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 17.4 5%, 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.
Ali purchased a $100,000 participating whole life policy. The annual premium is $2,000. Projected dividends for the first 20 years are $15,624. The cash value after 20 years will be $29,000. If the premiums were invested at 5 percent for 20 years. If the dividends were accumulated at 5 percent for 20 years, they would grow to be $25,600. (The future value interest annuity factor at 5% for 20 years equal 33.07).Based on this information, what is the surrender cost index per thousand per year of Ali's policy over the 20-year period? $20.27 $5.77 -$2. 00 $2.64
Bob has money in an investment with 5% that compounds 11 times a year. His initial investment was $1423.00, and now has been accruing interest for 6 years. What is the total value of his investment now?
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Alex invested P25,000.00 to a business. The ROR is 9 % compounded quarterly and he expects to have it after 8 years. How much will the investment company pay Alex after 8 years?
Troy will receive $9486 at the end of Year 2. At the end of the following two years, he will receive $7971 and $2238, respectively. What is the future value of these cash flows at the end of Year 6 if the interest rate is 4 percent?
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
Sherwood Forest Products has a convertible bond quoted on the NYSE bond market at 96. (Bond quotes represent the percentage of par value. Thus, 70 represents $700, 80 represents $800, and so on.) It matures in 10 years and carries a coupon rate of 7.00 percent. The conversion ratio is 20, and the common stock is currently selling for $28 per share on the NYSE. a. Compute the conversion premium. (Do not round intermediate calculations and round your answer to 2 decimal places.) Conversion premium b. At what price does the common stock need to sell for the conversion value to be equal to the current bond price? (Do not round intermediate calculations and round your answer to 2 decimal places.) Stock price
Bill is considering investing $450 at the end of each month in a fixed incone instrument. He will receive $27,000 at the end of four years. If interest is compounded monthly, what is the effective annual rate of return on the investment. A. 22.3% B. 15.1 % C. 11.6 % D. 11.1 % E. 13.6 %

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