FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

assume a stock is initially priced at $50, and pays an annual $2 dividend. An investor uses cash to pay $25 a share and borrows

assume a stock is initially priced at $50, and pays an annual $2 dividend. An investor uses cash to pay $25 a share and borrows the remaining funds at a 12 percent annual interest. What is the return if the investor sells the stock for $55 at the end of one year? (Answer is 16%)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business And Personal Finance

Business And Personal Finance

Authors: McGraw-Hill

1st Edition

0078945801, 9780078945809

More Books

Students also viewed these Finance questions

Question

★★★★★
Use the information for Odyssey Ltd. in BEl l -5. In exercise Odyssey Ltd. purchased machinery on January 1, 2014, for $60,000. The machinery is estimated to have a residual value of $6,000 after a...

Answered: 1 week ago

Question

★★★★★
Sorghum is an important cereal crop whose quality and appearance could be affected by the presence of pigments in the pericarp (the walls of the plant ovary). The article A Genetic and Biochemical...

Answered: 1 week ago

Question

★★★★★
The probability that a digital signal is transmitted incorrectly is p. Suppose a particular signal is transmitted repeatedly and that successive transmissions occur every two minutes. What is the...

Answered: 1 week ago

Question

★★★★★
Cooper Manufacturing, Inc., of Dallas, Texas, has a contract with the U.S. Air Force to produce a part for a new fighter plane being manufactured. The part is a bolt that has specifications requiring...

Answered: 1 week ago

Question

★★★★★
An asset manager wishes to reduce his exposure to the small cap stocks in his portfolio by using a swap in which he agrees to pay a dealer the return on a small-cap index based on a notional...

Answered: 1 week ago

Question

★★★★★
7.3 In 2018 it was estimated that approximately 44% of the American population watches the Super Bowl yearly. Suppose a sample of 121 Americans is randomly selected. After verifying the conditions...

Answered: 1 week ago

Question

★★★★★
Data is collected from 250 college students to determine if regular class attendance is related to overall Grade Point Average (GPA). The results are below. Percentage of Class Meetings Attended...

Answered: 1 week ago

Question

★★★★★
The headline of a news article posted on cbsnews.com read, "A 'coin flip': Nearly half of U.S. murders go unsolved as cases rise." Suppose that the probability a murder is successfully solved is...

Answered: 1 week ago

Question

★★★★★
Suppose the random variable X follows a normal distribution with mean = 54 and standard deviation following. a) P(X 60) c) P(49 Answered: 1 week ago

Answered: 1 week ago

Question

★★★★★
Americans face greater financial barriers in accessing careinsurance deductibles, copayments, and out-of-pocket expensesthan do those in other high-income countries (Schoen et al., 2009b,2010,2011)...

Answered: 1 week ago

Question

★★★★★
Compute the Riemann sum S43 to estimate the double integral of f(x, y) = 9xy over R = [1,5] [1,2.5]. Use the regular partition and upper-right vertices of the sub-rectangles as sample points. (Give...

Answered: 1 week ago

Question

★★★★★
Why should it be necessary for a department manager to pay any particular attention to employees who steadily fulfill their responsibilities and cause no problems?

Answered: 1 week ago

Question

★★★★★
This is a simple job were filling. It is a no-brainer, the department manager said, so just send me a warm body. If the first person doesnt work out, we can always get someone else, and weve lost...

Answered: 1 week ago

Question

★★★★★
Describe the components of a typical outplacement service package. Explain why such services are almost always provided by an external vendor.

Answered: 1 week ago

Previous Question Next Question