(a) Adequate information: Own investment is $5,000. The amount to be borrowed is $5,000. The interest rate is 8% p.a. The current market price of share is$50. To compute: The rate of return for the investor if the price of telecom stock goes up by 10% during the next year. Introduction: The cost of a stock is the present estimation of all future money streams from the stock. The required rate of return is that rate which a financial specialist anticipates from a stock. This rate is utilised to discount the normal future money streams from the stock. In an event, when a stock's profit develops at a specific rate for uncertain period, the stock is known as consistent growing stock.

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Answer 1

Question

Chapter 3, Problem 18PS

Summary Introduction

(a)

Adequate information:

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

The current market price of share is$50.

To compute:

The rate of return for the investor if the price of telecom stock goes up by 10% during the next year.

Introduction:

The cost of a stock is the present estimation of all future money streams from the stock. The required rate of return is that rate which a financial specialist anticipates from a stock. This rate is utilised to discount the normal future money streams from the stock. In an event, when a stock's profit develops at a specific rate for uncertain period, the stock is known as consistent growing stock.

Summary Introduction

(b)

Adequate information:

The maintenance margin is 30%

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

Current market price of share is $50.

To compute:

The price of the stock at which an investor receives margin call, if the maintenance margin is 30%.

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Wildcat, Incorporated, has estimated sales (in millions) for the next four quarters as follows: Q1 Q2 Q3 Sales $ 125 $ 145 $ 165 Q4 $ 195 Sales for the first quarter of the following year are projected at $140 million. Accounts receivable at the beginning of the year were $55 million. Wildcat has a 45-day collection period. Wildcat's purchases from suppliers in a quarter are equal to 45 percent of the next quarter's forecast sales, and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 20 percent of sales. Interest and dividends are $10 million per quarter. Wildcat plans a major capital outlay in the second quarter of $81 million. Finally, the company started the year with a cash balance of $70 million and wishes to maintain a $30 million minimum balance. a. Complete the following cash budget for Wildcat, Incorporated. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in millions,…

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Answer 2

Question

Chapter 3, Problem 18PS

Summary Introduction

(a)

Adequate information:

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

The current market price of share is$50.

To compute:

The rate of return for the investor if the price of telecom stock goes up by 10% during the next year.

Introduction:

The cost of a stock is the present estimation of all future money streams from the stock. The required rate of return is that rate which a financial specialist anticipates from a stock. This rate is utilised to discount the normal future money streams from the stock. In an event, when a stock's profit develops at a specific rate for uncertain period, the stock is known as consistent growing stock.

Summary Introduction

(b)

Adequate information:

The maintenance margin is 30%

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

Current market price of share is $50.

To compute:

The price of the stock at which an investor receives margin call, if the maintenance margin is 30%.

Expert Solution & Answer

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Answer 3

Question

Chapter 3, Problem 18PS

Summary Introduction

(a)

Adequate information:

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

The current market price of share is$50.

To compute:

The rate of return for the investor if the price of telecom stock goes up by 10% during the next year.

Introduction:

The cost of a stock is the present estimation of all future money streams from the stock. The required rate of return is that rate which a financial specialist anticipates from a stock. This rate is utilised to discount the normal future money streams from the stock. In an event, when a stock's profit develops at a specific rate for uncertain period, the stock is known as consistent growing stock.

Summary Introduction

(b)

Adequate information:

The maintenance margin is 30%

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

Current market price of share is $50.

To compute:

The price of the stock at which an investor receives margin call, if the maintenance margin is 30%.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 3, Problem 18PS

Summary Introduction

(a)

Adequate information:

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

The current market price of share is$50.

To compute:

The rate of return for the investor if the price of telecom stock goes up by 10% during the next year.

Introduction:

The cost of a stock is the present estimation of all future money streams from the stock. The required rate of return is that rate which a financial specialist anticipates from a stock. This rate is utilised to discount the normal future money streams from the stock. In an event, when a stock's profit develops at a specific rate for uncertain period, the stock is known as consistent growing stock.

Summary Introduction

(b)

Adequate information:

The maintenance margin is 30%

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

Current market price of share is $50.

To compute:

The price of the stock at which an investor receives margin call, if the maintenance margin is 30%.

Expert Solution & Answer

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Answer 5

Chapter 3, Problem 18PS

Summary Introduction

(a)

Adequate information:

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

The current market price of share is$50.

To compute:

The rate of return for the investor if the price of telecom stock goes up by 10% during the next year.

Introduction:

The cost of a stock is the present estimation of all future money streams from the stock. The required rate of return is that rate which a financial specialist anticipates from a stock. This rate is utilised to discount the normal future money streams from the stock. In an event, when a stock's profit develops at a specific rate for uncertain period, the stock is known as consistent growing stock.

Summary Introduction

(b)

Adequate information:

The maintenance margin is 30%

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

Current market price of share is $50.

To compute:

The price of the stock at which an investor receives margin call, if the maintenance margin is 30%.

Answer 6

Chapter 3, Problem 18PS

Summary Introduction

(a)

Adequate information:

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

The current market price of share is$50.

To compute:

The rate of return for the investor if the price of telecom stock goes up by 10% during the next year.

Introduction:

The cost of a stock is the present estimation of all future money streams from the stock. The required rate of return is that rate which a financial specialist anticipates from a stock. This rate is utilised to discount the normal future money streams from the stock. In an event, when a stock's profit develops at a specific rate for uncertain period, the stock is known as consistent growing stock.

Answer 7

Chapter 3, Problem 18PS

Summary Introduction

(a)

Adequate information:

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

The current market price of share is$50.

To compute:

The rate of return for the investor if the price of telecom stock goes up by 10% during the next year.

Introduction:

The cost of a stock is the present estimation of all future money streams from the stock. The required rate of return is that rate which a financial specialist anticipates from a stock. This rate is utilised to discount the normal future money streams from the stock. In an event, when a stock's profit develops at a specific rate for uncertain period, the stock is known as consistent growing stock.

Answer 8

Summary Introduction

(b)

Adequate information:

The maintenance margin is 30%

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

Current market price of share is $50.

To compute:

The price of the stock at which an investor receives margin call, if the maintenance margin is 30%.

Answer 9

Summary Introduction

(b)

Adequate information:

The maintenance margin is 30%

Own investment is $5,000.

The amount to be borrowed is $5,000.

The interest rate is 8% p.a.

Current market price of share is $50.

To compute:

The price of the stock at which an investor receives margin call, if the maintenance margin is 30%.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 3.8 - Suppose you by 100 shares of stock initially...Ch. 3.8 - Repeat Question 1 assuming your initial margin was...Ch. 3.9 - Suppose you sell short 100 shares of stock...Ch. 3.9 - Repeat Question t (b) but now assume that the...Ch. 3 - Prob. 1PS Ch. 3 - What are some different components of the...Ch. 3 - Prob. 3PS Ch. 3 - Prob. 4PS Ch. 3 - In what cirecumstances are private placements more...Ch. 3 - Prob. 6PS

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(b) Adequate information: The maintenance margin is 30% Own investment is $5,000. The amount to be borrowed is $5,000. The interest rate is 8% p.a. Current market price of share is $50. To compute: The price of the stock at which an investor receives margin call, if the maintenance margin is 30%.

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Chapter 3 Solutions