Question
Currently a stock index stands at 100 and the leveraged ETF is selling for $100. The ETF should generate a return that is twice the
- Currently a stock index stands at 100 and the leveraged ETF is selling for $100. The ETF should generate a return that is twice the daily return on the index. Over the next 21 days the value of the index and its daily percentage change are as follows:
Day
Value of the Index
Daily Percentage Change
1
100
2
110
10.0%
3
100
9.1
4
90
10.0
5
80
11.1
6
70
12.5
7
90
28.6
8
110
22.2
9
130
18.2
10
100
23.1
11
105
5.0
12
101
3.8
13
99
2.0
14
105
6.1
15
98
6.7
16
105
7.1
17
98
6.7
18
106
8.2
19
109
2.8
20
126
15.6
21
100
20.6
- What is the value of the ETF at the end of each day? Notice that at the end of 21 days, the index is back to its starting value of 100. What is the value of the ETF at the end of 21 days? Suppose that on day 22, the index rises 50 percent from 100 to 150; what is the percentage change in the ETF from day + through day 22? If you bought the ETF on day + and held it through day 22, did you earn the leveraged return that you expected?
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Mergers, Acquisitions and Other Restructuring Activities
Authors: Donald DePamphilis
8th edition
9780128024539, 128013907, 978-0128013908
