You Invest $3000 by buying 100 shares of Driss Inc at a price of $30 per share. One year from now, Driss pays you a dividend of 40 cents per share. One year later (i.e. two years from now), you get another dividend of 40 cents per share and you immediately sell your shares for $32 each. What return (IRR) did you get on your investment? (Do not round intermediate calculations. Report your result as a percentage. Round the final answers to 2 decimal places. Be careful - Excel's default is to report whole precentage points. Omit the % sign in your response. For example if your answer is 3.21%, just enter 3.21)

You Invest $3000 by buying 100 shares of Driss Inc at a price of $30 per share. One year from now, Driss pays you a dividend of 40 cents per share. One year later (i.e. two years from now), you get another dividend of 40 cents per share and you immediately sell your shares for $32 each. What return (IRR) did you get on your investment? (Do not round intermediate calculations. Report your result as a percentage. Round the final answers to 2 decimal places. Be careful - Excel's default is to report whole precentage points. Omit the % sign in your response. For example if your answer is 3.21%, just enter 3.21)

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

See similar textbooks

Similar questions

You were offered to buy shares of stock of a newly listed company. You decided to take 300 shares at Php 1200 per share. You plan on selling these shares when the market value doubles. If the prevailing rate of increase is 12% per year, how long do you expect to wait until you decide to sell your shares of stock? Explain your answer. Note: please sketch the cash flow diagram.
Assume you plan to invest a one-lump sum of $25,000 in the stock market for the next 10 years at a 4.75% annual return but will only do this, if and only it, the amount at the end of 10 years equals $40,000. Would you make such investment? Use an Excel formula to support your answer.
Compute the total and annual returns on the described investment. Four years after buying 50 shares of XYZ stock for $80 per share, you sell the stock for $6000.
Nofal Corporation will pay a $4.10 per share dividend next year. The company pledges to increase its dividend by 6 percent per year, indefinitely. Required: If you require a return of 10 percent on your investment, how much will you pay for the company’s stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Compute the total and annual returns on the described investment. Four years after buying 50 shares of XYZ stock for $60 per share, you sell the stock for $ 4300.
Suppose you purchase one share of the stock of Volatile Engineering Corporation at the beginning of year 1 for $36. At the end of year 1, you receive a $2 dividend and buy one more share for $30. At the end of year 2, you receive total dividends of $4 (i.e., $2 for each share) and sell the shares for $36.45 each. The dollar- weighted return on your investment is Answers: А. -1.75%. B. 8.00%. C. 4.08%. D. 8.53%. Е. 12.35%.
Suppose that you sell short 500 shares of Intel, currently selling for $40 per share. Your initial percentage margin is 60%. Assume you earn no interest on the funds in your margin account and Intel has paid no dividends. a. What will be your rate of return after one year if Intel stock is selling at $40? b. If the maintenance margin is 30%, how high can Intel's price rise before you get a margin call?
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. %
You buy Disney stock at $80/ share. It’s worth $85 at the end of the first year and $90 at the end of the second year. You decide to sell it at $90. No dividend is paid, what are the two one-year returns (expressed as a percent)? What is the annualized return or geometric average (it’s a percent) for the two years?
Suppose you purchase one share of the stock of Cereal Correlation Company at the beginning of year 1 for $35. At the end of year 1, you receive a $3 dividend, and buy one more share for $44. At the end of year 2, you receive total dividends of $6 (i.e., $3 for each share), and sell the shares for $50 each. The time-weighted return on your investment is? When performing the calculations, do not round any inputs or interim results until you get the final answer. Round your final answer to four places after the decimal point. The dollar-weighted return on your investment is? When performing the calculations, do not round any inputs or interim results until you get the final answer. Round your final answer to four places after the decimal point.
Suppose Alex has an opportunity to buy shares of Sunnyland Snacks Company. The shares are expected to pay a dividend of $2.50 per share in one year and to sell for $92.00 per share at that time. a. Suppose the current interest rate on safe assets is 5% and Alex believes that investing in Sunnyland is not risky. How much would Alex be willing to pay today for each share of the company? b. Suppose the current interest rate on safe assets is 5%. Alex is willing to pay at most $85.90 for each share of Sunnyland today. Calculate Alex’s risk premium.
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. If you wanted to lever up the returns of this trade, you could have executed it in your _____ account. A) cash B) margin C) brokerage D) bank

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS