What is the estimated return on the stock

Assignment Help Financial Management

Reference no: EM13950121

Mark would like to purchase a stock priced at $70. The stock is not expected to pay any dividends in the coming year. He can either put up the entire amount and purchase the stock, or borrow $35 from his brokerage firm at an annual interest rate of 12 percent and put up the remainder. Mark thinks he can sell the stock for $100 after one year

If Mark does not borrow any money from his brokerage firm, what is the estimated return on the stock?

A) 30.00 percent B) –42.86 percent C) –30.00 percent D) 42.86 percent E) none of these

If Mark borrows from his brokerage firm, his estimated return on the stock would be _______percent. A) 42.86 B) 85.71 C) 73.71 D) 30.00

Reference no: EM13950121

Questions Cloud

Determine the annual worth using an interest rate : A bridge has a first cost of $3,200,000. The bridge will require a one-time major repair in year 10 at a cost of $25,000. The AOC is $75,000 per year for years 1 -4 and $ 100,000 per year in year 5 and afterward forever. The bridge is expected to las..

What is the return on the stock : Karen just purchased a stock costing $33 on margin, paying $23 and borrowing the remainder from a brokerage firm at 15 percent annual interest. The stock pays an annual dividend of $2. If Karen sells the stock after one year at a price of $50, what i..

Production as will firm in competitive market for inputs : A monopsony firm will not pay as much for factors of production as will a firm in a competitive market for inputs. Graphically, demonstrate the equilibrium solution for the monopsonist and explain why this is different than the competitive solution.

What is the flexible-budget variance for february : Donellan Company has a standard and flexible budgeting system and uses a two-variance analysis of factory overhead. What is the flexible-budget variance for February

What is the estimated return on the stock : Mark would like to purchase a stock priced at $70. The stock is not expected to pay any dividends in the coming year. He can either put up the entire amount and purchase the stock, or borrow $35 from his brokerage firm at an annual interest rate of 1..

Expected return-what must the beta of this stock : A stock has an expected return of 14.8 percent, the risk-free rate is 5.8 percent, and the market risk premium is 7.5 percent. What must the beta of this stock be?

What must the expected return on this stock : A stock has a beta of 1.18, the expected return on the market is 11.2 percent, and the risk-free rate is 4.85 percent. What must the expected return on this stock be?

Assume the expected returns on these stocks : You own a portfolio that has $2,800 invested in Stock A and $3,900 invested in Stock B. Assume the expected returns on these stocks are 9 percent and 15 percent, respectively. What is the expected return on the portfolio?

State offers three different payout plans : You just got a call from your uncle indicating he just won $40,000 in the New York Take Five. He needs some financial advice. The state offers three different payout plans: He can receive $40,000 today, b: He can receive $100 per week for 10 years,

User Account

All Pages