What would have been the annual percentage returns

Assignment Help Financial Management

Reference no: EM131959964

Investor A makes a cash purchase of 200 shares of AB&C common stock for $60 a share. Investor B also buys 200 shares of AB&C but uses margin. Each holds the stock for one year, during which dividends of $6 a share are distributed. Commissions are 3 percent of the value of a purchase or sale; the margin requirement is 60 percent, and the interest rate is 10 percent annually on borrowed funds.

A. What is the percentage earned by investor A if he or she sells the stock after one year for $45? Round your answer to one decimal places.

What is the percentage earned by investor B if he or she sells the stock after one year for $45? Round your answer to one decimal places.

B. What is the percentage earned by investor A if he or she sells the stock after one year for $60? Round your answer to one decimal places.

What is the percentage earned by investor B if he or she sells the stock after one year for $60? Round your answer to one decimal places.

C. What is the percentage earned by investor A if he or she sells the stock after one year for $65? Round your answer to one decimal places.

What is the percentage earned by investor B if he or she sells the stock after one year for $65? Round your answer to one decimal places.

D. What is the percentage earned by investor A if he or she sells the stock after one year for $75? Round your answer to one decimal places.

What is the percentage earned by investor B if he or she sells the stock after one year for $75? Round your answer to one decimal places.

Now the question changes

If the margin requirement had been 40 percent, what would have been the annual percentage returns?

A. What is the percentage earned by investor A if he or she sells the stock after one year for $45? Round your answer to one decimal places.

What is the percentage earned by investor B if he or she sells the stock after one year for $45? Round your answer to one decimal places.

B. cWhat is the percentage earned by investor A if he or she sells the stock after one year for $60? Round your answer to one decimal places.

What is the percentage earned by investor B if he or she sells the stock after one year for $60? Round your answer to one decimal places.

C. What is the percentage earned by investor A if he or she sells the stock after one year for $65? Round your answer to one decimal places.

What is the percentage earned by investor B if he or she sells the stock after one year for $65? Round your answer to one decimal places.

15% (I got this one right I am not sure how)

D. What is the percentage earned by investor A if he or she sells the stock after one year for $75? Round your answer to one decimal places.

What is the percentage earned by investor B if he or she sells the stock after one year for $75? Round your answer to one decimal places.

Please show your work I want to learn this. Honestly if you just show me how to do the first few of both sections (part 1 &2) it would be greatly appreciated and help me learn this for my test later in the semester.

Reference no: EM131959964

Questions Cloud

What is the company nonoperating return : The fiscal 2016 financial statements of Nike Inc. shows net operating profit margin (NOPM) of 11.4%, What is the company’s nonoperating return?

How does the author reveal characters : Writing-about-short-stories-and-poetry -write 400 words analyzing characterization and point of view in "A&P," How does the author reveal characters

What is the percentage change in the real exchange : Suppose the exchange rate between Japanese Yen and U.S. dollar is 100 ¥/$. Is this the direct quote or indirect quote from the U.S. perspective?

What you see as neglecting our rights to free speech : What you see as neglecting our rights/responsibilities to free speech and use a specific example to explain your point. Speak freely (but civilly).

What would have been the annual percentage returns : Investor A makes a cash purchase of 200 shares of AB&C common stock for $60 a share. what would have been the annual percentage returns?

Identify the reasons that a project can fail : Identify three reasons that a project can fail. Propose a solution that will eliminate the problem and turn the initiative into a success.

Find an interesting iom problem from the real business : Find an interesting IOM problem from the real business world and think about how you can apply the IOM concepts/tools that you learned in this course to solve.

Write summary for the leadership team to review : Over the past 8 weeks, you have strategically built a learning plan for MacArthur and Associates. Your final step is to put together each section.

The number of years from today that investment : What is T, the number of years from today that investment B is expected to pay 58,772 dollars?

User Account

All Pages