21 Suppose that you purchased 300 shares of a stock at $36 pershare, ignoring all commissions. Assume the stock paid a dividendof $2.15 per share for the year. The stock price rose to $41.05 pershare and was then sold at that price.What was the capital gains yield?A. 10 percentB. 6 percentC. 14 percentD. 12.3 percent

Step 1: Given Value for Calculation Purchase Price per Stock = p = $36Selling Price per Stock = s =…

Answered: Suppose that you purchased 300 shares…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 17P

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1. You purchase 100 shares for $50 a share ($5,000), and after a yearthe price rises to $60. What will be the percentage return on yourinvestment if you bought the stock on margin and the marginrequirement was? a.25 percent b.50 percent c.75 percent 2. Repeat Problem 1 to determine the percentage return on yourinvestment but in this case suppose the price of the stock falls to$40 per share. What generalization can be inferred from youranswers to Problems 1 and 2? 3. How many years will it take for 197000 dollars to grow to 554000 dollars if it is invested in an account with a quoted annual interest rate of 8 percent with monthly compounding interest?
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