Problem 18-7 (Algo) A manager buys three shares of stock today, and then sells one of those shares each year for the next 3 years. His actions and the price history of the stock are summarized below. The stock pays no dividends. Time Price $ 185 0 1 23 3 195 195 195 Action Buy 3 shares Sell 1 share Sell 1 share Sell 1 share - Required: a. Calculate the time-weighted geometric average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Geometric average return b. Calculate the time-weighted arithmetic average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Arithmetic average return %

Problem 18-7 (Algo) A manager buys three shares of stock today, and then sells one of those shares each year for the next 3 years. His actions and the price history of the stock are summarized below. The stock pays no dividends. Time Price $ 185 0 1 23 3 195 195 195 Action Buy 3 shares Sell 1 share Sell 1 share Sell 1 share - Required: a. Calculate the time-weighted geometric average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Geometric average return b. Calculate the time-weighted arithmetic average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Arithmetic average 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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Please only solve part C A manager buys three shares of stock today, and then sells one of those shares each year for the next 3 years. His actions and the price history of the stock are summarized below. The stock pays no dividends. Time Price Action 0 $ 130 Buy 3 shares 1 150 Sell 1 share 2 150 Sell 1 share 3 150 Sell 1 share a. Calculate the time-weighted geometric average return on this portfolio Time Cash Return 0 3*-130= -390 1 1*150= 150 (150-130)/130= 15.38% 2 1*150= 150 (150-150)/150= 0% 3 1*150= 150 (150-150)/150= 0% Geo Avg Ret= (1.1538)1/3 - 1 = 4.88% b. Calculate the time-weighted arithmetic average return on this portfolio Arith Avg Ret= (15.38+0+0)/3 = 5.13% c. Calculate the dollar-weighted average return on this portfolio
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Intro A non dividend-paying stock currently trades at $80. You short sell one share of stock, buy a call option and write a put option, both with a strike price of $51. Your immediate cash inflow is $47.84. Both options expire in one year. Part 1 What is the risk-free rate? 3+ decimals
The composition of the Fingroup Fund portfolio is as follows: Price $ 41 37 23 40 Stock A B C Shares 200,000 294,000 403,000 630,000 During the year the portfolio manager sells all of the holdings of stock D and replaces it with 200,000 shares of stock E at $60 per share and 220,000 shares of stock F at $60 per share. What is the portfolio turnover rate? (Round your answer to 1 decimal place.) Turnover rate %
Problem 4-14 (Algo) The composition of the Fingroup Fund portfolio is as follows: Stock A 11 C D Shares 240,000 340,000 440,000 640,000 Turnover rato Price $ 30 35 10 15 Required: If during the year the portfolio manager sells all of the holdings of stock D and replaces it with 240,000 shares of stock E at $30 per share and 240,000 shares of stock F at $10 per share, what is the portfolio turnover rate? (Round your answer to 2 decimal places.)
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F3
A preferred stock is expected to pay a constant quarterly dividend of $1.25 per quarter into the future. The required rate of return, Rs, on the preferred stock is 13.5 percent. What is the fair value (or price) of this stock? 3 E Multiple Choice $37.04 $24.36 $52.36 $18.65 None of these choices are correct Q Search $ 4 R % 5 T * D 00 8
Question 5: Suppose that a March call option to buy a share for $50 costs $2.50 and is held until March. Under what circumstances will the holder of the option make a profit? Under what circumstances will the option be exercised? Draw a diagram showing how the profit on a long position in the option depends on the stock price at the maturity of the option.Plz explain it
Estimated rate of return for Stock shareholders A B Estimated price in T1 4 4 Estimated dividend in T1 0,2 12% 15% 0,5 Calculate, for both stocks, the equilibrium price in TO. With a market rate of return of 6% and a risk free rate of 1,5%, calculate the Beta of the two stocks. Which percentage of stock A and B should you buy in your portfolio so as to generate a rate of return of 13,25%? What would be the beta of this portfolio?

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