Problem 2-25 Calculating Short Sale Returns (LO4, CFA3) You just sold short 850 shares of Wetscope, Incorporated, a fledgling software firm, at $60 per share. You cover your short when the price hits $50.50 per share one year later. If the company paid $0.67 per share in dividends over this period, what is your rate of return on the investment? Assume an initial margin of 55 percent. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Rate of return %

Problem 2-25 Calculating Short Sale Returns (LO4, CFA3) You just sold short 850 shares of Wetscope, Incorporated, a fledgling software firm, at $60 per share. You cover your short when the price hits $50.50 per share one year later. If the company paid $0.67 per share in dividends over this period, what is your rate of return on the investment? Assume an initial margin of 55 percent. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Rate of 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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Problem 9,17 (Constant Growth) Stick Vali Your bruker offers to sell you sume shares of Bahnsen & Co. common stuck that paid a dividend of $1.00 yesterday. Bahnsen's dividend is expected to grow at 5% next 3 years. If per year for the you buy the stuck, you plan to hold it for 3 years and then sell it. The appropriate discount rate is 13% a) Find the expected dividend for each of the next 3 years; that is calculate D₁, D₂, and D3. Note that Do $1.00. 0₁ = $ D₂ = $ D₂ = 1 2 copilul raya b) Given that the first dividend payment will occur 1 year from now, find the present value of the dividend stream; that is calculate the PVs of Dg, Pr, and Ds, and then sem these PUs. 4 elds C.) You expect the price of the stock 3. years from now to be $15.19; that is, you expect P3 to equal $15.19. Discunted at a 13% rate, what is the present value of this expected future stuck price? In other words, Calarlate the PV of $15.19. $ d) If you plan to buy the stock, hold it for 3 years, and then sell it…
QUESTION ONE A. Why is the goal of financial management to maximize the current share price of the company's stock and not the future share price? B. Jane Muyaule has been given an opportunity to receive K20,000, six years from now. If she can earn 10% on her investments, what is the most she should pay for this opportunity? C. Explain why a company might issue convertible securities instead of straightforward debt or equity. Also, explain how convertibility affects expected return on investment. D. ZedChem is a pharmaceutical company in Zambia. The company's research department has identified a compound that can cure a common cold without any side effects. Unfortunately, the manufacture of this compound requires the company to invest heavily in a high technology factory which will use a number of new techniques, some of which are unproven. The company will also need to recruit and retain the services of a number of eminent scientists, each of whom is both vital to the project and…
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Question list Question 1 Question 2 O Question 3 O Question 4 K A local entrepreneur asks you to invest $3,000 in a business venture. Based on your estimates, you would receive nothing for 3 years, at the end of year 4 you would receive $1,081, and at the end of year 5 you would receive $4,374. If your estimates are correct, what would be the IRR on this investment? The yield on this investment is %. (Round to the nearest whole percent.)
Question 3 Juan is considering the following alternatives for investing in MM Industries: Buy Buy six month call options with: exercise price of for a premium of The selling price per share now Assume no commissions o taxes (ideal world) Assume in the stock reaches and a call was purchased What is the annualized percentage gain? 500shares $40 $6.00 $46 4months $48
Question 1 One of your colleagues has recommended that you buy 10 shares in a certain company, say, ABC Ltd. He tells you that the company has a good track record of paying regular dividend every year and the dividends are likely to grow at a rate of 4% per year on an average for the foreseeable future. The next dividend is expected to be $1.50 per share and the shares are selling in the secondary market for $28.50 per share. As per your financial plans and life profile, you feel that any risky investment like in shares of a company, should earn at least 9% per annum. 1. What might cause a difference between a share’s intrinsic value and its market price?
Question 1 One of your colleagues has recommended that you buy 10 shares in a certain company, say, ABC Ltd. He tells you that the company has a good track record of paying regular dividend every year and the dividends are likely to grow at a rate of 4% per year on an average for the foreseeable future. The next dividend is expected to be $1.50 per share and the shares are selling in the secondary market for $28.50 per share. As per your financial plans and life profile, you feel that any risky investment like in shares of a company, should earn at least 9% per annum. 1. Will you buy these shares? Why and support your reasoning with relevant computations.
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finance Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Do not provide Excel Screet shot rather use tool table Answer completely.

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