Question
1. An investor buys a stock for $3.20 per share and sells it 6 months later for $3.50. What is the (6-month) holding period yield?
1. An investor buys a stock for $3.20 per share and sells it 6 months later for $3.50. What is the (6-month) holding period yield?
2. Charles is planning to retire in 15 years. He plans to deposit $1500 every month. How much will he have in his account at the time of his retirement? Assume interest rates as 12% compounded monthly.
3. First Bank offers a rate of 7.4 percent compounded monthly. Second Bank offers 7.5 percent compounded quarterly. Find out the effective annual rate (EAR) for the two banks. You would like to deposit funds. Which bank will you choose and why? [5 marks]
4. Lily would like to have $400,000 at the end of 2 years. She can earn an interest of 8% compounded weekly on her savings. How much should Lily deposit today?
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