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Problem 2. In late 2010, you purchased the common stock of a company that has reported significant earnings increases in nearly every quarter since your purchase. The price of the stock increased from $12 a share at the time of the purchase to a current level of $45. Notwithstanding the success of the company, competitors are gaining much strength. Further, your analysis indicates that the stocks may be over priced based on your projection of the future earnings growth. Your analysis, however, was the same one year ago and the earnings have continued to increase. Actions that you might take range from an outright sale of the stock (and the payment of the capital gains tax) to doing nothing and continuing to hold the shares. You reflect on these choices as well as other actions that could be taken. Describe the various actions that you might take and their implications. Chapter 12 Problem 6. Find the real return on the following investments: STOCK NOMINAL RETURN INFLATION A 10% 3% B 15% 8% C -5% 2% Problem 8. The Countries of Stabilato and Variato have the following average returns and standard deviations for their stocks, bonds, and shorterm government securities. What range of returns should you expect to earn 95 percent of the time for each asset class if you invested in Stabilato's securities? From investing in Variato's securities? STABILATO ASSET AVERAGE RETURN STANDARD DEVIATION Stocks 8% 3% Bonds 5% 2% Short-term government debt 35 15 VARAITO ASSET AVERAGE RETURN STANDARD DEVIATION Stocks 15% 13% Bonds 10% 8% Short-term government debt 6% 3%
Computation the amount of each coupon payment and A bond has a par value of $1000 and a current yield of 6.452 percent
Suppose you are planning the purchase of an investment that would pay you $5,000 per year for years 1-5, $3,000 per year for years 6-8, and $2,000 per year for years 9 and 10.
Compute of Net Asset Value (NAV) of shares and Assume that you have recently purchased 100 shares in an investment company
Dade buy a patent on January 1, 2003 for $120,000. The patent had a remaining useful life of ten years at that date. In January 2004, Dade successfully defends patent at a cost of $54,000,
A Store paid an annual dividend of $11.15 per share last month. Today the company announced that future dividends will be increasing by 2.6 percent yearly.
A recession is an illustration of systematic risk because it affects the pattern of a number of aspects, Discuss some other examples of systematic risks?
Baruk Industries has no cash and a debt obligation of 36 million dollar that is now due. The market price of Baruk's assets is 81 milliondollar , and the firm has no other liabilities.
A football manufacturer and has fixed operating expenses of $400,000 and variable costs of $12 per football. The footballs sell for $35 each and They plan to sell 300,000 footballs this year.
What are the PV and FV of a 10-year ordinary annuity of $500 at 10% and PV and FV of the same annuity if it bacomes an annuity due?
We are estimating a project that costs $750,000, has an 8 year life, and has no salvage value. Suppose that depreciation is straight-line to zero over the life of the project.
Due to a number of lawsuits related to toxic wastes, major chemical producre has recently experienced a market revaluation. The company has a bond issue outstanding with fifteen years to maturity and a coupon rate of 8 percent,
Surgical Supplies Corp. paid a dividend of $1.12 over the last 12 months. The dividend is expected to grow at a rate of 25% over the next 3 years (supernormal growth). Compute the anticipated value of the dividends for the next 3 years (D1, D2, and..
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