Until recently, shares of stock accounted for 40 percent of Jimmy’s savings. A few days ago, Jimmy sold some bonds and bought some additional shares of stock. Now shares of stock account for 70 percent of Jimmy’s savings. How did this change affect Jimmy’s expected return on his savings? How did it affect the risks he faces?

Until recently, shares of stock accounted for 40 percent of Jimmy’s savings. A few days ago, Jimmy sold some bonds and bought some additional shares of stock. Now shares of stock account for 70 percent of Jimmy’s savings. How did this change affect Jimmy’s expected return on his savings? How did it affect the risks he faces?

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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Similar questions

You originally purchased a stock for $40 and now its worth $73. What annual rate of interest did you earn if you purchased the stock 10 years ago? PLEASE BREAK DOWN
You invested $800 in the stock market 5 years ago. Today your investment is worth $1200. What was the annual return on your investment?
4. Four friends Sheldon, Raj, Leonard and Howard decided to invest their 50,000 dollars savings in stocks. Each chooses a different stock. One chooses a blue chip stock, another a growth stock, the other chooses an income stock and another chooses a penny stock. From the following clues, determine who bought which stock. Sheldon and the owner of the blue chip stock purchased their shares through an online brokerage, while Raj and the owner of the growth stock did not. b. The gain in value of Leonard's stocks is twice the gain in the value of the growth stock. The income stock is traded on American Stock Exchange, whereas the stock that Raj bought is trades on the Chicago Stock Exchange а. С.
Your friend told you that she invested $1,000 in a portfolio of large-company stocks 5 years ago and also reinvested the dividends. Herinvestment grew to $3,456 as at today. Had she invested that same amount in a Government of Grenada bond she would have received $2,500even if she reinvested the 10 percent coupons paid on the bonds. REQUIRED How can you avoid the value of your stock from going down?
Your grandfather invested $1,000 in a stock 41 years ago. Currently, the value of his account is $317,000. What is his geometric return over this period?
Paul sells a stock short for $50.76 per share and buys it back 1 year later for $54.99 after he covers a $2.81 per share dividend. What is Paul’s total return on this investment? (Round answer to 2 decimal places (e.g., 36.45). Use a negative sign for a negative return.)
Abigail bought 28 shares of stock at $30.00 per share. She received dividends of $49.50 during the year. At the end of the year, her stock was valued at $43.50 per share. What was her ROI (Return on Investment)?
John invested $12,000 in the stock of Hyper Cyber. Eight years later, Hyper Cyber's shares reached $125,000, but John held onto the shares in the belief that their price would double in the next five years. Unfortunately, Hyper Cyber did not double. Rather the market value of John's shares today is $4,000. If the shares were sold today and the proceeds invested in another investment, they would likely earn 5% per annum. Which of the following tems and values is correct? a. $250,000 is the opportunity cost b. $12,000 is the sunk cost C. $2,000 is the opportunity cost d. $125,000 is the opportunity cost of selling the shares today
9 years ago Mary purchased shares in a certain mutual fund at Net Asset Value (NAV) of $96. She reinvested her dividends into the fund, and today she has 7.7% more shares than when she started. If the fund's NAV has increased by 39.5% since her purchase, compute the rate of return on her investment if she sells her shares today. Round your answer to the nearest tenth of a percent.
At the beginning of 2007, an investor buys 2 shares at $100 each. At the beginning of 2008, he buys another 3 shares at $120 each. At the beginning of 2009, he sells 1 share at $110 each. At the beginning of 2010, he sells the remaining 4 shares at $130 each. The stock does not pay any dividend. Calculate the dollar-weighted rate of return.

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