Question
A) Suppose an investor placed $ 93 on a Fidelity High Yield Fund (FHYF) share a month ago. Today this placement in the FHYF pays
A) Suppose an investor placed $ 93 on a Fidelity High Yield Fund (FHYF) share a month ago. Today this placement in the FHYF pays the investor a dividend of $ 0.53. The investor then sells his share at $ 94. What is the total return of the investor (Total Shareholder Return, TSR)? B) The company Ilios has now announced that it will reduce the dividend per share from $ 4 to $ 2.50 and will use these funds to expand its activities. Prior to this announcement, the company's dividends were projected to increase by 3% and its share price was at $ 50. With the new expansion, the company's dividends are expected to grow by 5%. What is the expected share price after this announcement? Assume that the expected performance of the company remains unchanged with the new expansion. Is this expansion valued as a profitable investment? C) Suppose an investor in 220 shares of Johnson and Johnson (JNJ) at $ 70 per share and 240 shares of Yahoo (YHOO) at $ 20 per share. Suppose the price of Johnson and Johnson rises to $ 80 and the price of Yahoo falls to $ 18 per share. What is the return on the portfolio?
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