Chapter 20, Problem 10P

a.

Summary Introduction

To calculate: The value offered per share of Chicago Savings Corp.

Introduction:

Share Price:

The highest price of one share of a company that an investor is willing to pay is termed as the share price. It is current price used for the trading of such a share.

b.

Summary Introduction

To calculate: The percentage gain at the computed price in part (a) for Chicago Savings Corp.

Introduction:

Rate of return:

A rate that shows the net profit or loss, an investor earns or loses on the investment over a particular time period is termed as the rate of return.

Percentage Gain:

It is the percentage that shows the net gain, an individual gain at the time of selling a product and it can be calculated by dividing the difference of the cost price and selling price from the original price (cost price). It is incurred when a product is sold at more than its cost price.

c.

Summary Introduction

To calculate: The percentage loss value after the cancellation of merger for Chicago Savings Corp.

Introduction:

Rate of return:

A rate that shows the net profit or loss that an investor earns or loses on the investment over a particular time period is termed as the rate of return.

Percentage Loss:

It is the percentage that shows the net loss that an individual loses at the time of selling a product and it can be calculated by dividing the difference of the cost price and selling price from the original price (cost price). It is incurred when a product is sold at less than its cost price.

d.

Summary Introduction

To calculate: The expected value of the return on Chicago Savings Corp.’s investment.

Introduction:

Expected value:

Also known as the mean, it is the value that is estimated or anticipated to be earned in the future from an investment. It is computed by adding up the values that are the result of multiplying each outcome from the probability.