Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

There are 9 finance calculation problem, help me fix it and you have to show the calculation steps for each questions. 1. You buy a

image text in transcribed

There are 9 finance calculation problem, help me fix it and you have to show the calculation steps for each questions.

image text in transcribed 1. You buy a stock on February 1. By June 1 of the same year, your investment has earned you a 5.2% return. Find the annualized return (based your calculation on full months held). 2. You are going to invest in XYZ Enterprises, Inc. The company has been growing at 35% per year and you believe this rate will last for two more years. After that, you believe the firm will grow at 7% per year indefinitely. Dividends last paid were $2 million, and investors currently require a return of 18%. What is the total value of the company? 3. What is the market risk premium on a stock if investors require a 10% rate of return, beta is 1.6, and the risk free rate is 2%? 4. You purchase a call option for stock Y with an exercise price of $33. The fee for the call is $2.50. What is your net profit or loss if the price of the stock falls to $30 (remember that standard option contracts are for 100 shares)? 5. You purchase a put option for stock Z with an exercise price of $27. The fee for the call is $2.50. What is your net profit or loss if the price of the stock falls to $21 (remember that standard option contracts are for 100 shares)? 6. You earn the following returns: Year Retur : n: 1 -30% 2 50% 3 7% a.) Find the arithmetic average return b.) Find the geometric average return 7. You decide to open a margin account. You have $8,500 of your own money to contribute. The initial margin is 40%. The maintenance margin is 35%. You decide to invest in stock A and the quote is Q66.33/66.92. a.) How many shares of stock can you purchase? b.) At what price will you receive a margin call? 8. You see the following stock quote for stock X: Q40.89/41.01. a.) You decide to short the stock. You short 10 shares, then the price rises to $45.00. Calculate the profit/loss. b.) You decide to take a long position and buy 10 shares. The price rises to $45.00. Calculate the profit/loss. 9. Calculate the price weighted and value weighted returns for an index made up of these stocks: Stoc k Shares Yr 1 price Yr 2 price A 500 40 53 B 250 30 12 C 250 15 31

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

Real Estate Finance and Investments

Authors: William Brueggeman, Jeffrey Fisher

14th edition

73377333, 73377339, 978-0073377339

More Books

Students also viewed these Finance questions

Question

What is project management, and what are its main objectives?

Answered: 1 week ago

Question

Follow the problem-solving process described in this chapter.

Answered: 1 week ago

Question

How do sex and gender differ?

Answered: 1 week ago