Year 2018 2019 2020 2021 Beginning-of-Year Price $ 120 144 108 120 Dividend Paid at Year-End $4 An investor buys three shares of XYZ at the beginning of 2018, buys another two shares at the beginning of 2019, sells one share at the beginning of 2020, and sells all four remaining shares at the beginning of 2021. a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-year rates of return and final answers to 2 decimal places. Do not round other calculations.) Answer is complete but not entirely correct. Arithmetic average rate of return Geometric average rate of return 2.08 % 123 %

Year 2018 2019 2020 2021 Beginning-of-Year Price $ 120 144 108 120 Dividend Paid at Year-End $4 An investor buys three shares of XYZ at the beginning of 2018, buys another two shares at the beginning of 2019, sells one share at the beginning of 2020, and sells all four remaining shares at the beginning of 2021. a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-year rates of return and final answers to 2 decimal places. Do not round other calculations.) Answer is complete but not entirely correct. Arithmetic average rate of return Geometric average rate of return 2.08 % 123 %

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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Question 4. A stock that pays no dividends has price today of 100. In one year’s time the stock is worth 110 with probability 0.75 and 85 with probability 0.25. The one-year annually compounded interest rate is 5%. a) Calculate the forward price of the stock for a forward contract with maturity one year. b) Calculate the price of a one-year European put option with strike 100. c) Suppose you observe that the put option in part (b) has a market price of 4. Determine an arbitrage portfolio and calculate how much profit is generated at time T = 1 by this portfolio.
Use the dividend discount model to value a share of Toyota’s stock (ticker symbol: TM) as of December 31, 2021. In your application of this model, use the data provided on the most recent Toyota Value Line report to estimate the necessary dividend payment and the firm’s equity beta. Assume, that the expected growth rate of dividends in perpetuity (g) ranges from 2.5% to 3.5%/year.
An investor who bought money-market securities at a yield of 5.50% p.a. and sold the parcel for a few weeks later at a yield of 5.85% p.a. would earn: a interest b a capital loss c a capital gain d. interest and a capital loss e. interest and capital gain.
Required Returns Suppose we observe a stock selling for $40 per share. The next dividend will be $1 per share, and you think the dividend will grow at 12 percent per of the stock? What will the stock be worth in five Problem 1.) 7.2. year forever. What is the dividend yield in this case? The capital gains yield? The total required return? (See Problem 3.)
Use the Black-Scholes formula for the following stock: Time to expiration 6 months Standard deviation 42% per year Exercise price $44 Stock price $43 Annual interest rate 2% Dividend 0 Calculate the value of a call option. (Round to 2 decimal places.) Value of a call option ?
As an analyst at an investment bank, you are asked to compare the monthly returns of the two stocks Tesla and Apple Inc during the period of August 2020 to March 2021: Tesla, Xi Aug Sep Oct Nov Dec Jan Feb Mar 0.038 0.199 0.187 -0.069 0.481 0.392 -0.039 -0.150 Apple Inc, y: 0.184 -0.010 0.111 -0.042 0.027 0.052 0.051 -0.106 Σx₁ = 1.039 Σ(x-x)² = 0.3549 Σχ Σy = 0.267 Σ(y: - y)2 = 0.0564
You are considering purchasing a share of preferred stock with the following characteristics: par value = $100 dividend rate = 12% per year payment schedule = quarterly maturity date = required rate of return = 6% per year current market price = $135 per share Based on this information, answer the following: A. What is the dollar amount of the quarterly dividend on this stock? B. Using the Discounted Cash Flow Method, what is the dollar value of this stock? C. Using the Discounted Cash Flow Method, what is the annual expected return for this stock? D. Based on your answer to part B, should you invest in the stock? Why or why not? E.…
You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns: Year TA TB 2017 -17.00% -8.00% 2018 34.00 14.00 2019 29.00 -18.00 2020 -5.00 55.00 2021 21.00 19.00 a. Calculate the average rate of return for each stock during the 5-year period. Do not round intermediate calculations. Round your answers to two decimal places. Stock A: 12.40 % Stock B: 12.40 b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? Do not round intermediate calculations. Round your answers to two decimal places. Negative values, if any, should be indicated by a minus sign.
Calculate the end-of-year return for the following investment purchased for $14 at the beginning of 202X. Distributions and Prices Changes 202X Per-share income distributions: $0.20 Per-share capital gains distributions: $0.40 Year-end NAV: $15.25 Year-end market price: $15.00 If required, round your answer to two decimal places. a. 10.67% b. 11.43% c. 10.49% d. 13.21%
17. Based on the following table, if you invest $15,000 into AAPL stock at the beginning of the period, what would be the dollar value of your investment at the end of the time period? AAPL Date 2/1/2023 13.33% 3/1/2023 -13.99% 4/1/2023 6.53% 5/1/2023 -3.68% 6/1/2023 9.01% 7/1/2023 1.81% 8/1/2023 7.13% 9/1/2023 0.43% 10/1/2023 -2.66% 11/1/2023 5.33% 12/1/2023 4.77% 1/1/2024 12.89% Average Variance St. Dev. A. $15,512 B. $16,154 C. $19,467 D. $21,725 E. $22,831 3.41% 0.005910 7.69%
Use the Black-Scholes formula for the following stock: Time to expiration 6 months Standard deviation 60% per year Exercise price $57 Stock price $57 Annual interest rate 3% Dividend 0 Recalculate the value of the call with the following changes: a. Time to expiration 3 months b. Standard deviation 25% per year c. Exercise price $64 d. Stock price $64 e. Interest rate 6% Select each scenario independently. Note: Round your answers to 2 decimal places.
You purchased three contracts of "XYZ December 4 2015 84.00 Call" at $5.50 per options and exercised it when the underlying stock price was $92. What was your profit and return on the investment, excluding the commisions.

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