What is your annualized return from these two investments

Assignment Help Financial Management
Reference no: EM131296674

Suppose you have $90,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $90 per share. You also notice that a call option with a $90 strike price and six months to maturity is available. The premium is $4.5. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $97 per share? What about $86 per share?

Reference no: EM131296674

Questions Cloud

Analyze the results in terms of time value of money : Create a chart summarizing the details of the investment for both Bob and Lisa. Explain the results in terms of time value of money.
What changes can the company expect in the future : What changes can the company/brand expect in the future? How can the company/brand better serve its customers? Include information about potential opportunities and threats.
Advocates position and the critics : Evaluate both the advocates' position and the critics' position. Determine which position you support and defend your position.
What par amount would you invest in each zero coupon bond : What par amount would you invest in each zero coupon bond if you decide to hold a 3-year bullet portfolio? What par amount would you invest in each zero coupon bond if you decide to hold a barbell portfolio?
What is your annualized return from these two investments : Suppose you have $90,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $90 per share. You also notice that a call option with a $90 strike price and six months to maturity is available. The premi..
Assume that required returns are based on the capm : The risk-free rate, R subscript f , is 6 percent and the market risk premium, open parentheses R with hat on top subscript m minus R subscript f close parentheses , is 5 percent. Assume that required returns are based on the CAPM. If the risk-free ra..
For capital budgeting purposes : XYZ Inc. needs to install a new manufacturing machine. The base price is $100,000. Installation costs are $10,000. After 3 years the machine will be sold for $75,000. Applicable depreciation rates are 33 percent, 45 percent, 15 percent, and 7 percent..
If businesses claim to have no extra-legal obligations : If businesses claim to have no extra-legal obligations, how can they claim the right to influence law and regulation? If law and regulation embed the moral framework and businesses have no extra-legal obligations, expertise or responsibility, are bus..
What is the after-tax yield on the bond : You are trying to decide whether to buy the ABC corporate bond that yields 6.5%, or the Bucksville municipal bond that yields 4.60%. a. If you are in a 15% marginal income tax bracket, what is the after-tax yield on the ABC bond?

Reviews

Write a Review

Financial Management Questions & Answers

  Finding the present value of all the cash flows

You have determined the profitability of a planned project by finding the present value of all the cash flows from that project. Which of the following would cause the project to look more appealing in terms of the present value of those cash flows?

  The hamptons home of a famed socialite hits the market

“Before there was Paris Hilton, there was Consuelo Vanderbilt Balsan – a Gilded Age heiress and socialite, re-nowned for her beauty and wealth. Now Ms. Balsan’s onetime Hamptons home is slated to hit the market priced at $28 million with Tim Davis of..

  What is the company cost of equity capital

Skillet Industries has a debt–equity ratio of 1.4. Its WACC is 8.0 percent, and its cost of debt is 5.9 percent. The corporate tax rate is 35 percent. What is the company’s cost of equity capital?  What is the company’s unlevered cost of equity capit..

  Golbal remitence case-financial account components

Where are remittances across borders included within the balance of payments? Are they current or financial account components? Under what conditions are remittances significant contributors to the economy and overall balance of payments? What role d..

  What is the current bond price

Great Wall Pizzeria issued 10-year bonds one year ago at a coupon rate of 5.4 percent. If the YTM on these bonds is 8.1 percent, what is the current bond price?

  Differentiate between decreasing-charge depreciation methods

Summarize the authoritative guidance for asset impairments under IFRS. Give at least two (2) examples of events that could cause an asset to be tested for impairment, and recommend the best method to determine the fair value of an impaired asset. Dif..

  The preferred dividends were paid

Pop Company had 100,000 shares of common stock outstanding on January 1, 2014. On September 30, 2014, Pop sold 48,000 shares of common stock for cash. The preferred dividends were paid in 2014.

  Offered an investment opportunity

You are offered an investment opportunity: pay $1000 a year for ten years then you will receive $2000 a year for 20 years.” If you require 8% return on our investment, would you accept this investment opportunity?

  Is note providing for variable amount of interest

Heidi borrowed $35,000 from Leopold Mortgage Corp. and signed a promissory note secured by a deed of trust on the land she owned. The note provided for interest at "30% over prime to be adjusted monthly." Is a note providing for a variable amount of ..

  Projected external capital requirements

Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. If sales are projected to..

  Calculate the expected cash flow

EOG Resources incurred $275,000 in drilling costs prior to deciding when to complete the well. Estimated completion costs are $175,000. The expected net cash flows from the sale of the oil and gas from this well are $300,000. Should the well be compl..

  How much would the reduction in assets improve the ROE

Last year Kruse Corp had $420,000 of assets, $403,000 of sales, $28,250 of net income, and a debt-to-total-assets ratio of 39%. Sales, costs, and net income would not be affected, and the firm would maintain the same debt ratio (but with less total d..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd