Can someone please solve #1 with work shown thanks!
Understand the risks associated with investing in common stock. SUMMARY: Stocks have more risk than other securities; however, you can eliminate much of this risk through diversification. Still, sometimes the stock market drops dramatically, and when that happens, no amount of diversification can help you out. That type of risk, resulting from overall movements in the market, is measured by the beta. The average beta is 1.0, meaning it moves up or down about as much as the market does. If a stock has a beta greater than 1.0, it will move up more than the market when the market moves up and will move down more than the market when the market moves down. If the stock's beta is less than 1.0, the stock will move up less than the market when the market moves up and will move down less than the market when the market moves down. KEY TERMS Beta, page 421 The measure of how responsive a stock or portfolio is to changes in the market portfolio, such as the S&P 500 Index. Problems and Activities Assume that you own 200 shares of General Dynamics Corp. (GD) selling at $ 90 per share. In order to make the stock more affordable for the average investor, GD's management has decided to split the stock. How much was your investment worth prior to the split? Assuming GD's management decides to split the stock three-for-one, how many shares would you own after the split? What would the new price per share be immediately after the split? How much would your investment be worth after the three-for-one split? Haley Corporation has just announced year-end results as follows: Value of company assets $12, 500, 000 Value of company liabilities $6, 500, 000 Net income $1, 600, 000 Common stock dividends $250, 000 Preferred stock dividends $400, 000 Number of shares of common stock outstanding 1, 000, 000 Closing price of Haley Corporation's stock $45.00 per share