Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

is urgent. please answer all questions Question Five (A) An investor bought 1000 shares of Ecobank Ghana Limited on 1st January 2017 through an investment

image text in transcribed

image text in transcribed

is urgent. please answer all questions

Question Five (A) An investor bought 1000 shares of Ecobank Ghana Limited on 1st January 2017 through an investment broker and instructed the broker to re-invest any dividends received in additional shares of Ecobank. During the year, Ecobank paid three dividends. The first was paid at the end of April. The next dividend, paid at the end of July, grew by 25% and the last paid in October grew by 20%. The information on dividends and share prices at the time of dividend payments is indicated below: Date Price Per share in Cedis Dividend Per Share in Pesewas January 20 April 25 July 23 October 18 120 December 24 The investor calculated the return on his investment for the one-year holding period using the simple method but is not sure whether this is correct. You are required to: (a) Determine what rate of return the investor obtained from the calculation (3 marks) (b) Explain the limitations in the calculation in (a) (3 marks) (c) Provide a correct calculation of the investor's return using The index method (3 marks) The linking method (3 marks) (d) Show how much the investment is worth at the end of each month if the investor were to sell the shares at the price prevailing in that month and divide the investor's gain into dividend yield and capital gain in both absolute and percentage terms. (3 marks) Question Five (A) An investor bought 1000 shares of Ecobank Ghana Limited on 1st January 2017 through an investment broker and instructed the broker to re-invest any dividends received in additional shares of Ecobank. During the year, Ecobank paid three dividends. The first was paid at the end of April. The next dividend, paid at the end of July, grew by 25% and the last paid in October grew by 20%. The information on dividends and share prices at the time of dividend payments is indicated below: Date Price Per share in Cedis Dividend Per Share in Pesewas January 20 April 25 July 23 October 18 120 December 24 The investor calculated the return on his investment for the one-year holding period using the simple method but is not sure whether this is correct. You are required to: (a) Determine what rate of return the investor obtained from the calculation (3 marks) (b) Explain the limitations in the calculation in (a) (3 marks) (c) Provide a correct calculation of the investor's return using The index method (3 marks) The linking method (3 marks) (d) Show how much the investment is worth at the end of each month if the investor were to sell the shares at the price prevailing in that month and divide the investor's gain into dividend yield and capital gain in both absolute and percentage terms

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

Emerging Market Finance New Challenges And Opportunities

Authors: Bang Nam Jeon, Ji Wu

1st Edition

1839820594, 978-1839820595

More Books

Students also viewed these Finance questions

Question

600 lb 20 0.5 ft 30 30 5 ft

Answered: 1 week ago

Question

Why do mergers and acquisitions have such an impact on employees?

Answered: 1 week ago

Question

2. Describe the functions of communication

Answered: 1 week ago