Describe wally present investment program

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Reference no: EM132969812

a. How would you describe Wally's present investment program? How do you think it fits him and his investment objectives?

b. Consider the Hydro-Electric stock.

1. Determine the amount of annual dividends Hydro-Electric can be expected to pay over the years 2013 to 2017.

2. Compute the total dollar return that Wally will make from Hydro-Electric if he invests $6,000 in the stock and all the dividend and price expectations are realized.

3. If Wally participates in the company's dividend reinvestment plan, how many shares of stock will he have by the end of 2017? What will they be worth if the stock trades at $80 on December 31, 2017? Assume that the stock can be purchased through the dividend reinvestment plan at a net price of $50 a share in 2013, $55 in 2014, $60 in 2015, $65 in 2016, and $70 in 2017. Use fractional shares, to 2 decimals, in your computations. Also, assume that, as in part b, Wally starts with 100 shares of stock and all dividend expectations are realized.

c. Would Wally be going to a different investment strategy if he decided to buy shares in Hydro-Electric? If the switch is made, how would you describe his new investment program? What do you think of this new approach? Is it likely to lead to more trading on Wally's behalf? If so, can you reconcile that with the limited amount of time he has to devote to his portfolio?

Reference no: EM132969812

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