Investment Management

1. You constructed an index with the 5 largest companies in NSADAQ: AAPL, GOOG, MSFT, AMZN, and FB. Their current price is $136, $832, $65, $852, and $135 respectively. What will be the initial divisor if the initial index value is 1,000? If both AMZN and GOOG undergoes an 8:1 split so that their price will be closer to the other 3, how will the divisor value change?

2. You bought 2,000 shares of CSCO at $30 last year. The stock is currently trading at $34. The company paid $1.04 in dividend during the last 12 months. What is the difference in return if you purchase with 50% margin verse no margin, if the margin interest is 6%?What if the stock fell to $27 a share?