Suppose you buy 100 shares of Abolishing Dividend Corporation at the beginning of year 1 for $80. Abolishing Dividend Corporation pays no dividends. The stock price at the end of year 1 is $100, the price is $120 at the end of year 2, and the price is $150 at the end of year 3. The stock price declines to $80 at the end of year 4, and you sell your 100 shares. For the four years, your geometric average return is O 0.0% 5.7% 9.2% 34.5%

Suppose you buy 100 shares of Abolishing Dividend Corporation at the beginning of year 1 for $80. Abolishing Dividend Corporation pays no dividends. The stock price at the end of year 1 is $100, the price is $120 at the end of year 2, and the price is $150 at the end of year 3. The stock price declines to $80 at the end of year 4, and you sell your 100 shares. For the four years, your geometric average return is O 0.0% 5.7% 9.2% 34.5%

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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company X has 100 shares outstanding. It earns $2,000 per year perpetually and announces that it will use $1,000 to repurchase its shares in the open market instead of paying dividends. Calculate the number of shares outstanding at the end of year 1, after the first share repurchase, if the required rate of return is 10%. A. 110.0 B. 95.45 C. 100.0 D. 104.55 E. 90.91
You bought a share of Pacebook stock for $20 at the beginning of the year. Pacebook stock paid dividend of $1.50 total this year. Now, it is the end of the year, and you decided to sell the stock at the current price of $23. If you ignore any trading costs and taxes, what is your simple holding period return on the stock? answer is 22.5%
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2 years ago I purchased 100 shares of General Mills Corporation for $42 a share plus a commission of $29 to purchase. During the last 2 years I received the dividend amount 1.92 per share the first year and 1.96 per share the second year. At the end of 2 years I sold my stock for $49 a share minus a total commission of $34 to sell the stock. What is the dividend yield of my stock when I purchased it?? What is my dividend yield at the time I sold it? What is my total return when I sold the stock and the end of 2 years? What is the annualized holding period yield of my investment at the end of w years?
In you cash account, you buy 100 shares of XYZ Corporation at a price of $10 per share. Two months later, XYZ pays a dividend $0.21 per share. You sell all 100 shares of XYZ three months later at a price of $12 per share. What is your total return on this trade in dollar amount?
You own $107,000 worth of Smart Money stock. One year from now, you will receive a dividend of $2.95 per share. You will receive a dividend of $3.10 two years from now. You will sell the stock for $72 per share three years from now. Dividends are taxed at the rate of 38 percent. Assume there is no capital gains tax. The required aftertax rate of return is 16 percent. How many shares of stock do you own? Give typing answer with explanation and conclusion
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Two years ago, you purchased 100 shares of General Mills Corporation. Your purchase price was $61 a share, plus a total commission of $38 to purchase the stock. During the last two years, you have received total dividends of $2.48 per share. Also, assume that at the end of two years, you sold your General Mills stock for $66 a share minus a total commission of $36 to sell the stock. Calculate the total return for your investment and the annualized holding period yield. O Total return on the investment: $574. Annualized holding period yield: 4.70%. O Total return on the investment: $674. Annualized holding period yield: 5.52%. O Total return on the investment: $774. Annualized holding period yield: 6.34%. O Total return on the investment: $874. Annualized holding period yield: 7.16%.

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