the call money rate is 6.8 percent, and you pay a spread of 1.9 percent over that. You buy 1,300 shares at $93 per share with an initial margin of 55 percent. One year later, the stock is selling for $101 per share and you close out your position.
Q: The following shows beta for several companies. Calculate each stock’s expected rate of return using…
A: CAPM stands for the capital asset pricing model. It is an important model in finance that is used to…
Q: If the underling is a liability rather than an asset, then the strike price of the option should be…
A: The option is a financial security since a buyer can purchase the right rather than the obligation…
Q: 1. How much would the equal monthly payments be on a student loan of $10,500 that has a ten-year…
A: Solution:- When an amount is borrowed, it can either be repaid as a lump sum payment or in…
Q: What is Eurodollar futures? Why and when will a company use Eurodollar futures?
A: We need to explain Eurodollar futures and why and when they are used.
Q: Interest prepaid by the buyer, which may be used to reduce the stated interest rate the lender…
A: Margin in loan is the down payment made on the total cost of the house or asset bought. The loan…
Q: (Related to Checkpoint 14.1) (Weighted average cost of capital) The target capital structure for QM…
A: Weight of common stock, Ws 42% Weight of preferred stock,Wp 5% Weight of Debt, Wd is 53% Cost of…
Q: IBM stock currently sells for 64 dollars per share. The implied volatility equals 40.0. The…
A: A financial tactic used with call-and-put options is delta hedging. This tactic lessens the risks…
Q: Use the following amortization chart: Selling price of home Down payment Principal (loan) Rate of…
A: Monthly Mortgage Payment A mortgage payment is composed of principal and interest. Early on in the…
Q: For projects with cash outflows up front and cash inflows later on, ignoring the time value of money…
A: Concept. While making investment decisions, time value of money is considered as extremely important…
Q: You have just been employed as an investment analyst in an investment bank. You took over from…
A: Honor Code: Since you have posted a question with multiple sub-parts, we will solve the first three…
Q: For his business, Nicholas leased equipment valued at $23 000. The terms of the lease required…
A: In contrasts to a fee that the borrower may pay the lender or another party, interest is a payment…
Q: QUESTION 4 You are considering starting a new factory producing small electric heaters. Each unit…
A:
Q: Are bio technology company stock is currently selling for $48.35 per share. The earnings per share…
A: The current yield is the dividend per share expressed as a percentage of the Share price. The Price…
Q: Simpson Inc. stock provided a return of 8.0%, 15% and -8% returns in the past three years. What is…
A: Expected return on the stock is the average rate of return earned on the investment and is the…
Q: The U.S. risk-free rate is 2.1% and the expected inflation rate is 6.2%. If the expected inflation…
A: The implied risk free rate is the rate of return on a risk free asset based on theoretical…
Q: Find the present amount needed to attain a future amount of F dollars in the given time using an…
A: Discounting The process of arriving at the present value based on future cash flows is known as…
Q: IBM stock currently sells for 49 dollars per share. Over 12 months the price will either go up by…
A: Delta of an option is to be calculated by taking the change in the value of an option as the…
Q: If underlying is non-dividend paying, then the time value of an American call option is positive,…
A: Call option provides its holder to purchase shares at the pre-specified price known as strike price…
Q: Find the periodic payment for each sinking fund that is needed to accumulate the given sum under the…
A: Future Value is $2,200,000 Interest rate r is 4% compounded quarterly Quarterly rate is 4%4=1% Time…
Q: Suppose that there are two independent economic factors, F1 and F2. The risk-free rate is 6%, and…
A: As per the given information: Risk-free rate - 6% Standard deviation - 43% Portfolio Beta on F1…
Q: elling Price of Home Down Payment Rate of Interest Years $ 190,000.00 $ 50,000.00 7% 25 Required:…
A: Here, Corrected Table 15.1:
Q: Daniel and Jan agreed to pay $556,000 for a four-bedroom colonial home in Waltham, Massachusetts,…
A: As per the given information: Agreed amount = $556,000Down-payment = $70,000 To determine: We have…
Q: If one euro buys 1.13 U.S.? dollars, how many euros can you purchase for 12 U.S dollars? (Round to…
A: If one euro = 1.13 U.S. dollar 1 U.S. dollar = 11.13euro = 0.884956
Q: Consider a project that has an initial outlay of $1,200. The firm's cost of capital is 10%. The…
A: Net present value(NPV) of a project is calculated using following equation NPV = -CF0 + CF1/(1+d)1 +…
Q: Hector needs $10,000 in 8 years. How much money should he deposit at the end of each quarter into a…
A: Quarterly deposit amount is calculated using following equation Periodic deposit = FV×i1+in-1 Where,…
Q: entract can be fulfiled by pounded semi-annually? The payment is $ Round the final answer to the…
A: Annuity can be paid by the uniform and equal at the end of periods based on the interest rate and…
Q: If you buy a home with less than 20% down, you will pay an additional monthly fee, PMI (private…
A: The mortgage are secured loans because the home act as collateral and the loans can be recovered if…
Q: 1a. A stock trades for $42 per share. A call option on that stock has a strike price of $54 and an…
A: Given: Particulars Current stock price $42 Standard deviation 41% Risk free rate 5%…
Q: IBM stock currently sells for 100 dollars per share. The implied volatility equals 20.0. The…
A: 100 Dollars 200 Shares - IBM Stock
Q: You want to calculate the 30 Day 95% VaR for the following portfolio. You invest $5 million in the…
A: We have to find the 30 day 95% VaR of a portfolio of two assets.
Q: Calculate the Accrued interest in dollars and the total purchase price in dollars of the Bond…
A: Accrued interest The interest amount that is due on bond or any other debt is known as accrued…
Q: Find the future value for the constant growth annuity where the rate of growth is 0.75%, the…
A: Concept. FV = A [(1+r)n - (1+g)n ] ÷ ( r-g) Where , FV = future value A = timely payment r =…
Q: 15- The common stock of Permanent Assurance Corporation currently trades at $40.00 per share, which…
A: The monetary ratio termed as "dividend yield" assesses the amount of cash dividends paid to…
Q: Hedging using forward rates: Assume the hypothetical spot rate between the USD and GBP was 1.6187…
A: Worth of contract in Pounds (GBP)= 200000 So its value in USD($)=200000*1.6187=$ 323740
Q: A person wants to establish an annuity for retirement purposes. He wants to make quarterly deposits…
A: Solution:- An equal amount withdrawn is made each period at end of period, is known as ordinary…
Q: Dinklage Corporation has 8 million shares of common stock outstanding. The current share price is…
A: Here, To Find: WACC =?
Q: The U.S. dollar spot exchange rate with the Canadian dollar Is $1= CA$1.10. The U.S. dollar and…
A: Cross rate is the rate between two currencies that are both valued against a third currency.
Q: Annette commits to a mortgage with an interest rate of 4% compounded monthly for the first 16 years…
A: Present value of annuity due Annuity is a series of equal periodic payments over a specified period.…
Q: arithmetic and geometric average time-weighted rates of return
A: The average return on a stock is calculated using the arithmetic return, which does not take…
Q: the APR. 1. Helen Olson needs an installment loan of $999.00. She must repay the loan in 24 months.…
A: Solution:- When an amount is borrowed, it can either be repaid as lump sum payment or in…
Q: You have a Bond paying 5.48% semi-annual coupon and maturing on 14-Jul-2029 and currently trading at…
A: 5.48% s - semi-annual coupon 6.22%p.a. -T+1 basis
Q: A company is considering the purchase of a new piece of equipment that costs $50,500 and will have a…
A: The initial cost of Equipment is $50,500 The salvage Value of the Equipment is $5,050 The increase…
Q: A project requires an intial investment of $100,000 (at t= 0) and is expected to generate cash flows…
A: The profitability index (PI), also known as the value investment ratio (VIR) or profit investment…
Q: Compute the discounted payback statistic for Project C if the appropriate cost of capital is 7…
A: Initial cost = $2,400 Cost of capital = 7% Discounted payback period = ?
Q: 3. Bayshore Associates is considering several capital investment decisions before investing in one…
A: Investments are made in order to purchase assets in the hopes that their value would rise over time.…
Q: Unida Systems has 32 million shares outstanding trading for $9 per share. In addition, Unida has $85…
A: Cost of capital is the percentage of expectation that shareholders want from the company, or if the…
Q: Q2/ If A= $2000 and i-8% and n=20, what is the future amount? Q3/ Find the effective interest rate…
A:
Q: What force of interest is equivalent to 7.8% p.a. compounded biweekly for the next 8 years followed…
A: We have to find the force of that adequately substitutes the sequential 7.8% p.a. compounded…
Q: The annual interest rate on a credit card is 16.99%. If a payment of $100 is made each month, how…
A: Solution: When an equal payment is made each period at end of period, it is known as ordinary…
Q: alculate the accrued interest (in$) and the total purchase price(in$) of the bond purchase. Round…
A: The price of bond is the present value of coupon payment and present value of par value of the bond…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Suppose the call money rate 6.8 percent, and you pay a spread of 1.9 percent over that. You buy 700 shares at $61 per share with an initial margin of 65 percent. One year later, the stock is selling for $66 per share and you close out your position. What is your return assuming no dividends are paid? Rate of Return = ?Suppose the call money rate is 4.5 percent, and you pay a spread of 2.5 percent over that. You buy 800 shares of stock at $36 per share. You put up $14, 400. One year later, the stock is selling for $48 per share and you close out your position. What is your return assuming a dividend of $0.65 per share is paid?Suppose the call money rate is 4.5 percent, and you pay a spread of 2.5 percent over that. You buy 1,200 shares of stock at $48 per share. You put up $37,440. One year later, the stock is selling for $60 per share and you close out your position. What is your return assuming a dividend of $0.24 per share is paid? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Rate of return %
- Suppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account. a. if you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: $22, $20, and $18? Assume that Xtel's pays no dividends. b. If the maintenance margin is 25%, how high can Xtel's price rise before you get a margin call? c. Redo parts a and b but now assume that Xtel has paid a year end dividend of $1 per share. The pruces in part a should be interpreted as ex-dividend, that is prices after the dividend has been paid.Suppose you bought XYZ stock 1 year ago for $6.54 per share and sell it at $2.79. You also pay a commission of $0.35 per share on your sale. What is the total return on your investment? The total return is %?You expect a share of EconNews.Com to sell for $65 a year from now. If you are willing to pay $65.74 for one share of the stock today, and you assume the share is riskless but require a return of 8 percent, what dividend payment must you expect to receive from the stock?
- You have just purchased a share of stock for $20.29.The company is expected to pay a dividend of $0.52 per share in exactly one year. If you want to earn a 9.1% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $_______.(Round to the nearest cent.)You purchase a stock for $50 per share today. It will pay a dividend of $1.75 next month. If you can sell it for $65 right after the dividend is paid, what is the dividend yield? What is the capital gain? What is the rate of return?You buy a share of stock for $100 and it pays no dividend. A year later the market price is $105. What is the rate of return?
- You have just purchased a share of stock for $18.85. The company is expected to pay a dividend of $0.71 per share in exactly one year. If you want to earn a 9.1% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $. (Round to the nearest cent.) CSuppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account.a. If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: (i) $22; (ii) $20; (iii) $18? Assume that Xtel pays no dividends.b. If the maintenance margin is 25%, how high can Xtel’s price rise before you get a margin call?c. Redo parts (a) and (b), but now assume that Xtel also has paid a year-end dividend of $1 per share. The prices in part (a) should be interpreted as ex-dividend, that is, prices after the dividend has been paid.You have just purchased a share of stock for $21.34. The company is expected to pay a dividend of $0.54 per share in exactly one year. If you want to earn a 9.4% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $ (Round to the nearest cent.)