Suppose that in the IBM example above, the investor borrows only $5,000 at the 3.5 same interest

Question:

Suppose that in the IBM example above, the investor borrows only $5,000 at the 3.5 same interest rate of 9% per year. What will the rate of return be if the price of IBM goes up by 30%? If it goes down by 30%? If it remains unchanged?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Essentials Of Investments

ISBN: 9780073368719

7th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

See More Books

Question Posted: Oct 20, 2023 06:27 AM

See More Questions

KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
Last Sale Net Bid Ask Open Int Puts Last Sale Net bid Ask Vol Open Int 16Aug 155.00(1619H155-E) 6.45 0.75 6.95 7.25 9 16Aug 155.00(1619T155-E) 1.18 (0.75) 1.17 1.25 61 4505 16Aug 166.00(1619H160-E)...
The unadjusted trial balance of Simple Consulting Services as at December 31, 2021 is as follows: Cash Accounts receivable Prepaid insurance Supplies inventory Office equipment Accumulated...
Comment on the following statements and situations: a. The best researchers are prepared to rethink and rewrite their proposals. b. The clients signature is an essential element of the research...
The platform scale consists of a combination of third and first class levers so that the load on one lever becomes the effort that moves the next lever. Through this arrangement, a small weight can...
Why do companies compensate their employees through bonus agreements and profitsharing plans?
The following information pertains to Titan Corporation and its two subsidiaries, Boat Corporation and Engine Corporation: a. The three corporations are all in the same industry and their operations...
PROBLEM 4 Roth Contractors Corporation was incorporated on December 1, 2015 and had the following transactions during December: Part A (a) Issued share capital for $5,000 cash. (b) Paid $1,200 for...
The Equity Fund sells Class A shares with a front-end load of 4% and Class B shares with 12b-1 fees of .5% annually as well as back-end load fees that start at 5% and fall by 1% for each full year...
What type of trading order might you give to your broker in each of the following circumstances? a. You want to buy shares of Intel to diversify your portfolio. You believe the share price is...
Refer to the data in Exercises 1-36B and 1-37B. Requirement 1. Prepare the statement of cash flows of Croyden Copy Center, Inc., for the month ended July 31, 2013. Using Exhibit 1-11 as a model, show...
How do we design an electromagnetic relay?
How do we design an electromagnetic sensor?
What is a virtual breadboard?
Joe secured a loan of $13,000 four years ago from a bank for use toward his college expenses. The bank charges interest at the rate of 9%/year compounded monthly on his loan. Now that he has...
Answer these two questions 1 32 2 Number of Units Sold 3 4 ! Direct Material units per unit of production 5 i 6 Total Direct Materials Used 7! 8 Price Per Unit 9 10 Cost of Direct Materials 11 12 13...
Which of the casting processes would be suitable for making small toys in large numbers? Explain.
Show that gj concave AHUCQ Abadie For nonnegative variables, we have the following corollary.
Assume that stock market returns have the market index as a common factor, and that all stocks in the economy have a beta of 1 on the market index. Firm-specific returns all have a standard deviation...
The SML relationship states that the expected risk premium on a security in a one-factor model must be directly proportional to the securitys beta. Suppose that this were not the case. For example,...
Consider the following multifactor (APT) model of security returns for a particular stock. a. If T-bills currently offer a 6% yield, find the expected rate of return on this stock if the market views...
delet question
Texas Petrochemical reported the following April activity for its VC-30 lubricant, which had a balance of 395 qts.@ $4.30 per quart on April 1. Purchases: Apr. 10 Apr. 14 Apr. 20 595 qts @ $4.40 495...
A company manufactures and sells a product for $124 per unit. The company's fixed costs are $72,760, and its variable costs are $94 per unit. The company's break-even point in units is: Multiple...

Suppose that in the IBM example above, the investor borrows only $5,000 at the 3.5 same interest

Question:

Step by Step Answer:

To calculate the rate of return in different scenarios for an investor who borrows 5000 ...View the full answer

Essentials Of Investments

Students also viewed these Business questions