You pald cash for $800 worth of stock a year ago. Today the portfolio is worth $1,150. a. What rate of return did you earn on the Investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return % b. Now suppose that you bought the same stock but bought it on margin. The initial margin requirement was 55%. Recalculate your rate of return, ignoring any Interest due. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return c. Recalculate the rates of return for a cash purchase in the event that the stock is worth $750 today. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return

You pald cash for $800 worth of stock a year ago. Today the portfolio is worth $1,150. a. What rate of return did you earn on the Investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return % b. Now suppose that you bought the same stock but bought it on margin. The initial margin requirement was 55%. Recalculate your rate of return, ignoring any Interest due. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return c. Recalculate the rates of return for a cash purchase in the event that the stock is worth $750 today. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return

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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Consider an investment whose annual return is normally distributed with a mean of 6% and a standard deviation of 14%. (a) What is the probability that I lose money on this investment, in any given year? Please express your answer as a percentage, to the nearest ten basis points. Probability of Losing Money = (b) What is the 10% value at risk on the investment? Please express your answer as a percentage, to the nearest ten basis points. VaR 0.1 = % % (c) If I invest in this asset, how much should expect to lose in my worst year out of 10? Please express your answer as a percent, to the nearest ten basis points. %
You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment if the year-end stock prices turn out to be $38, $40, and $42? What is your real (inflation-adjusted) rate of return in each case, assuming an inflation rate of 3%? Show all of your working. Do no use Excel.
Indicate whether the following statements are true or false (circle one). Use 1 or 2 sentences to discuss why it is so. (a) If R, is simple 1-month return, then the annualized return is 12 x R, after assuming all R = R. True False Why? (b) Let and r GSA be continuously compounded 1 - month returns for Goldman Sachs Group (GS) and American International Group (AIG). If we construct a portfolio using the share ain[0, 1] for GS, the portfolio cc return is ľ AIG = 0x*y +(1-x)*r True False Why? (c) In 5. (b)., if 5% quantile of the portfolio cc return is given as AIG, GS, r 40.05 = -0.5, then 5% monthly Value-at-Risk for the $10,000 investment in this portfolio is $10,000 × (-0.5) = -$ 5,000. True False r
Already have answers for A-C, just need D. Thank you! :)
(Computing rates of return) From the following price data, compute the annual rates of return for Asman and Salinas. Time 1 2 3 12 4 14 (Click on the icon in order to copy its contents into a spreadsheet.) How would you interpret the meaning of the annual rates of return? Asman $9 11 Salinas $30 27 32 36 The rate of return you would have earned on Asman stock from time 1 to time 2 is %. (Round to two decimal places.)
Suppose you have $375,000 in cash, and you decide to borrow another $63,750 at a 7% interest rate to invest in the stock market. You invest the entire $438,750 in a portfolio J with a 20% expected return and a 28% volatility. a. What is the expected return and volatility (standard deviation) of your investment? b. What is your realized return if J goes up 39% over the year? c. What return do you realize if J falls by 19% over the year?
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The payoff table below indicates the returns (in RM thousands) of investments in stock, bond and fixed deposit under different economic situations. Type of Investment Stock Bond Fixed Deposit Table 1 Economic Situation Good 150 50 45 Stable 60 40 45 Poor -30 36 45 The probabilities of good, stable and poor economy are 0.3, 0.5 and 0.2, respectively. What is the best investment based on the expected monetary value criterion? Draw a decision tree.
Jersey Jewel Mining has a beta coefficient of 1.5. Currently the risk-free rate is 4 percent and the anticipated return on the market is 6 percent. JJM pays a $5.00 dividend that is growing at 3 percent annually. Do not round intermediate calculations. What is the required return for JJM? Round your answer to two decimal places. % Given the required return, what is the value of the stock? Round your answer to the nearest cent. $ If the stock is selling for $159, what should you do? The stock overvalued and be purchased. If the beta coefficient declines to 1.2, what is the new value of the stock? Round your answer to the nearest cent. $ If the price remains $159, what course of action should you take given the valuation in d? The stock is and be purchased.

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