What will be the percentage of return on investment, Financial Accounting

Assignment Help:

1. A stock sells for $10 a share. you purchase 100 shares for $1000 and after a year, the prices rises to $17.50. What will be the percentage of return on your investment if you bought the stock on margin and the margin requirement was 25%, 50%, and 75%? ( ignore commissions, dividends and interest expense)
2. Repeat problem 1 to determine the percentage return on your investment but in this case suppose the price of stock falls to $7.50 per share.
3.What generalization can be inferred from the answers to problems 1 and 2?
4.Ms. Gandi has decided that the stock of SmallCap inc is overvalued at $4 a share and wants to sell it short. Since the price is relatively low, short sales cannot be executed on margin so Ms Gandi must put up the entire value of the stock when it is sold short.
a) what is the percentage loss if the price of the stock rises to $8?
b)what is the percentage loss if the price of the stock rises to $10?
c) What is the percentage gain if the company goes bankrupt and is dissolved?
d) What are the maximum percentage gain the short seller can earn and the largest percentage loss the seller can sustain?
e)From the short sellers perspective, what are the best and worst case scenarios?


Related Discussions:- What will be the percentage of return on investment

Determine the cost of equity, Lockheed Martin's management wishes to fi...

Lockheed Martin's management wishes to find out whether they have excess debt capacity. Its current market value of equity is $40 b and its book value of debt is $

4 page assignment, How do I know how much is service fee ?

How do I know how much is service fee ?

Revaluations, Revaluations Partners rarely revalue their assets and any r...

Revaluations Partners rarely revalue their assets and any revaluations may be carried out when a new partner is being admitted or an old partner is retiring.   To facilitate th

Calculate the expected dividend yield, Assume that it is now January 1, 201...

Assume that it is now January 1, 2012. XYZ Inc. has developed a solar panel capable of generating 200% more electricity than any other solar panel currently on the market. As a res

Financial management, What can a financial institution often do for a defic...

What can a financial institution often do for a deficit economic unit (DEU)that it would have difficulty doing for itself if the DEU were to deal directly with an SEU?

Calculate the capital investment - time value money, Q. The capital invest...

Q. The capital investment appraisal techniques such as NPV, IRR, ARR, PV and Time value of money have become irrelevant post Celtic Tiger. Due to the depth of the recession comp

Simulate the robot on a computer, Assuming the robot is placed on track at ...

Assuming the robot is placed on track at the packing station facing away from the station) the robot traverses the entire track. During this step, the robot will follow a left-hand

Define the term relevance - accounting information, Define the term Relevan...

Define the term Relevance - accounting information Accounting information should have the ability to influence decisions. Except this characteristic is present, there is ac

Determine the net worth of personal assets, Igor and Angela were married in...

Igor and Angela were married in 2005, separated in 2011, and divorced recently. At the time of marriage, each had some investments and personal assets. They both worked during the

Write Your Message!

Captcha
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