You have $38,000 you would like to invest in two different stocks, Stock Boll and Stock Coff. The buying limit on Stock Coff is $14,700 and you want to spend at least four times as much money on Stock Boll as Stock Coff.If Stock Boll earns 5% annual interest and Stock Coff earns 4% annual interest, how much money (in dollars) should you invest in each stock to maximize your annual interest earned? What is the maximum annual interest (in dollars)?if you invest $in Stock Boll and $in Stock Coff.You will earn a maximum total annual interest of $

Investment earnings for an investor. Income flows to investors in the form of interest, dividends,…

Answered: You have $38,000 you would like to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A stock will pay you $7.42 per quarter. You plan to hold it for 6 years and think you could sell it for 105.58 at that time. You have done some research and think that the fair return on the stock is 12.32%, how much should you pay for the stock today? Answer:
You purchase 2,000 shares of Nice Kick Group (NKG) at $45 per share by giving your broker $60,000 to establish your margin account and borrowing the rest from your broker. A year has passed (t=1), and NKG paid out a dividend of $2 per share. The maintenance margin is 25%. If you paid an interest at a rate of 8% on the funds you borrowed from your broker, what is the NKG price at which would trigger a margin call? A. $60.94 B. $36.25 C. $71.07 D. $18.93
An investor opens a margin account with an initial deposit of $5500. He then purchases 870 shares of a stock at $44. His margin account has a maintenance margin requirement of 30%. Ignoring commissions and interest, IF the price changed to 27 WHAT IS YOUR NEW EQUITY The correct answer is AT WHAT PRICE YOU WILL GET A MARGIN CALL PRICE?
A stock currently sells for $20 per share and pays $1 per year in dividends. What is an investor's valuation of this stock if she expects it to be selling for $27 in one year and requires a 8 percent return on equity investments?
1. You just sold a stock for $85. If the stock appreciated at 6% annually, and you owned it for eight years, what was the original price that you paid for the stock? 2. You are considering buying some order fulfillment software that is projected to save your company $27,500 per year for 3 years. If the current rate your company uses to evaluate its investments is 9%, what are you willing to pay for this investment?
You purchase 110 shares for $40 a share ($4,400), and after a year the price falls to $35. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense): 15 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. % 50 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. % 75 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. %
K You are considering how to invest part of your retirement savings. You have decided to put $600,000 into three stocks: 52% of the money in Gold Finger (currently $28/share), 22% of the money in Moosehead (currently $96/share), and the remainder in Venture Associates (currently $4/share). Suppose Gold Finger stock goes up to $45/share, Moosehead stock drops to $65/share, and Venture Associates stock rises to $5 per share. a. What is the new value of the portfolio? b. What return did the portfolio earn? c. If you don't buy or sell any shares after the price change, what are your new portfolio weights? a What is the new value of the portfolio?
You buy stock on margin in your brokerage account when it is trading at $42.76 per share. You have $4050 in equity (cash) in your account and buy 195 shares. Your broker makes a margin loan so you can pay the difference at an annual rate of 0.0825 One year later the stock price is 44.9 What is the margin percentage in the account one year after the trade is made? Group of answer choices 0.4933 0.4698 0.4247 0.4447 0.4014
Suppose that Xtel currently is selling at $46 per share. You buy 250 shares using $8,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 6%. Required: a. What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to: (i) $48.76; (ii) $46; (iii) $43.24? What is the relationship between your percentage return and the percentage change in the price of Xtel? b. If the maintenance margin is 25%, how low can Xtel's price fall before you get a margin call? c. How would your answer to (b) change if you had financed the initial purchase with only $5,750 of your own money? d. What is the rate of return on your margined position (assuming again that you invest $8,000 of your own money) if Xtel is selling after 1 year at: (i) $48.76; (ii) $46; (iii) $43.24? What is the relationship between your percentage return and the percentage change in the price of Xtel? Assume that Xtel…
Suppose that Brue currently is selling at $50 per share. You buy 900 shares using $36,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 7%. What is the percentage increase in the net worth of your brokerage account if the price of Brue immediately changes to (a) $56; (b) $50; and (c)$44?

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