Problem 2. You open a 1000 share short position in Happy Bunny Inc. common stock at the bid-ask price spread of $32.00 - $32.50. When you close your position the bid-ask prices are $30.25 - $30.50. Happy Bunny Inc. common stock paid a cash dividend in the amoount of $0.20 per share while you held the short position. If you pay a commission of $10 per trade, and interest rates are zero, calculate your profit or loss on the investment position?

Problem 2. You open a 1000 share short position in Happy Bunny Inc. common stock at the bid-ask price spread of $32.00 - $32.50. When you close your position the bid-ask prices are $30.25 - $30.50. Happy Bunny Inc. common stock paid a cash dividend in the amoount of $0.20 per share while you held the short position. If you pay a commission of $10 per trade, and interest rates are zero, calculate your profit or loss on the investment position?

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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A firm has 7,000 outstanding shares with current value of 10£ per share. Planned dividend is £5 per share. What is the ex-dividend share price? How much is the share price if the company decides to use the cash it had originally earmarked for dividend for a share repurchase instead? A. £5, £10 B. £10, £5 C. £8, £10 D. £2, £12 ( explain well with step by step answer ).
You sell short 340 shares of Doggie Treats Inc. Which are currently selling at $27 per share. You post the 52% margin required on the short sale. If your broker requires a 26% maintenance margin, at what stock price will you get a margin call? (You earn no interest on the funds in your margin account and the firm does not pay any dividends) Multiple Choice $56,57 $32.57 $22.57 $27.57
The Royal Gold’s stock currently sells for RM 90 per share. The firm issued rights to raise new equity. To purchase a new share, a stockholder must remit RM 25 and four rights. (Tip: use ratio perspective to approximate the share of quantity.) (a) Calculate the price of one right.
In the above example, suppose the firm had paid $80 per share when buying back shares with its $100 in cash. (Assume that the firm can buy back fractional shares.) In this and the following two questions, fill in the blanks in the table below. Cash Other assets Total market value of stock Shares Share price Do not use $ sign. Answer to nearest whole number. The missing value for a is: Before buyback $100 $400 $500 10 $50 After buyback 0 $400 a b C
Q: Corn, Inc., has an odd dividend policy. The company has just paid a dividend of $6 per share and has announced that it will increase the dividend by $2 per share for each of the next four years, and then never pay another dividend. suppose you require an 11 percent return on thecompany’s stock.Required:a) how much will you pay for a share today?b) Is the value of this stock dependent upon how long you plan to hold it? would this affect the value of the stock today?c) What happens if a company has a constant growth g that exceeds its cost of capital ks?Will many stocks have expected g> ks in the short run? In the long run (that is, forever)?
Hettenhouse Company's perpetual preferred stock sells for $103.00 per share, and it pays a $7.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC? a. 7.28% b. 7.50% c. 7.66% Od. 8.23%
Having heard about IPO underpricing, I put in an order to my broker for 1, 120 shares of every IPO he can get for me. After 3 months, my investment record is as follows: IPO Shares Allocated to Me Price per Share Initial Return A 620 $ 10 6 % В 320 20 14 C 1, 1208-3D0 12 23 a. What is the average underpricing in dollars of this sample of IPOs? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the average initial return on my "portfolio" of shares purchased from the four IPOs that I bid on? When calculating this average initial return, remember to weight by the amount of money invested in each issue.
An investor bought 200 CYH shares with a par value of P1.00 per share at P50.00. He received cash dividends of P2.00 per share. The company also declares split dividend of 2-1. The market price after the payment of split is P30.00. Assuming that the investor sold all his shares, how much is the capital gains on the sale of shares of stocks (disregard commission and other charges)? a. 2,400 b. 14,400 c. 12,000 d. 14,000
1. The net proceeds per share are equal to the price per share of preferred stock minus flotation cost per share of newly issued ____.2. XYZ sells new shares for $25/share but incurs transaction costs of $5/share. Assume that the investor's required rate of return is 15% for each $25 share, the cost of capital is ___.3. ABC sells new shares for $55/share but incurs transaction costs of $5/share. Assume that the investor's required rate of return is 20% for each $55 share, the cost of capital is ___. 4. Since firms must pay flotation costs when they sell bonds, the net proceeds per bond received by the firm is less than the ____ of the bond.5. The firm's cost of capital is sometimes referred to as the firm's ______ of capital. 6. The ________ is equal to the quantity of after-tax cost of debt multiplied by the proportion of debt financing plus the quantity of cost equity multiplied by the proportion of equity financing.7. The price of a share of preferred stock is equal to _____ divided…
You are bearish on Sienar Fleet Systems, you sold short one round lot (100 shares) at $85 per share. On March 1, a dividend of $2 per share was paid. On April 1, you covered the short sale by buying the stock for the price of $70. You paid $.25 per share in commissions for each transaction. Sienar Fleet Systems Market Price, January 1 $85.00 Market Price, March 1 $82.00 Dividend, March 1 $2.00 Market Price, April 1 $79.00 Broker Commission, per Share $0.25 Maintenance Margin 0.35 Investor Shares Sold Short 100 Required: Using the information in the tables above (the Company, the Broker, and the Investor), solve the cash flows involved in the short sale of this company. Then calculate the rate of return. (Use cells A5 to B15 from the given information to complete this question.) Short Sale Net…
elizabeth eaarns $9.50 a share, sells for $90, and pays a $6 per sharedeviden. the stock is split two for one and a $3 pers share cash dividend is diclared. what will be the new price of the stock? if the firms total earnings to do not change, what is the payout ratio before and after stock split?
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