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Suppose you have $35,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $70 per share. You also notice that a call option with a $70 strike price and six months to maturity is available. The premium is $3.5. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $76 per share? What about $66 per share? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Annualize return STOCK OPTION
$76 per share % %
$66 per hsare % %
What is the Break-even Point
Suppose two people are the same age and have the same level of wealth. -Who should hold a higher fraction of his or her wealth in stock? Explain.
Broussard Skateboard's sales are expected to increase by 15% from $7.4 million in 2015 to $8.51 million in 2016. Its assets totaled $5 million at the end of 2015. Broussard is already at full capacity, so its assets must grow at the same rate as proj..
Raymond Supply, a national hardware chain, is considering purchasing a smaller chain, Strauss & Glazer Parts (SGP). Raymond's analysts project that the merger will result in the following incremental free cash flows, tax shields, and horizon values: ..
Hickock Mining is evaluating when to open a gold mine. The mine has 34,000 ounces of gold left that can be mined, and mining operations will produce 6,800 ounces per year. The required return on the gold mine is 10 percent, and it will cost $34.8 mil..
SGS Corp. has an ROE of 9 percent and a payout ratio of 17 percent. What is its sustainable growth rate? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
You are constructing a portfolio of two assets, Asset A and Asset B. The expected returns of the assets are 14 percent and 17 percent, respectively. The standard deviations of the assets are 40 percent and 48 percent, respectively.
Keys Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r* = 3.0%, the inflation premium for 5-year bonds is IP = 1.75%, the liquidity premium for Keys' bonds is LP = 0.75% versus zero for T-bonds, and ..
One source of potential conflict between bond and stockholders is the amount of liquidity the company should maintain. It was recommended to have a consistent and upward moving dividend policy if the firm is in the maturity stage of operations. A sun..
In an era where employees do not rely completely on the same employer to provide them with work throughout their careers, do you think employers have a responsibility to encourage their employees to pursue educational opportunities? Why or why not?
As your text describes, ratio analysis is a common technique in financial analysis. One of your colleagues states that a thorough ratio analysis is all that is needed in considering the financial health of a company. Discuss at least three potential ..
In a bank, there are two quotation on the exchange rate board for Japanese Yen. $0.0041 $0.0039 Which quotation is the bank’s bid rate? Calculate the bid-ask percentage spread.
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