25) You own 20000 shares in Boohoo plc. Currently they trade at 99p for bid and 100p for offer, which typically reflect the average spread conditions. However, the spread has a standard deviation of 1p. Under normal market conditions, the cost of liquidation should be closer to: (reminder - critical level for a one-sided 95% tail of a standard normal distribution is 1.65) a) £10 b) £16.50 c) £83.50 d) £100

25) You own 20000 shares in Boohoo plc. Currently they trade at 99p for bid and 100p for offer, which typically reflect the average spread conditions. However, the spread has a standard deviation of 1p. Under normal market conditions, the cost of liquidation should be closer to: (reminder - critical level for a one-sided 95% tail of a standard normal distribution is 1.65) a) £10 b) £16.50 c) £83.50 d) £100

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

You are told by your investment advisor that Laduma Co. is expected to earn R5 per share next year, R6 per share the following year and that thereafter earnings are expected to grow by 8% per year. The dividend payout ratio is 60% and the required rare or return on Laduma shares is 15%. If the current share price is R40, would you expect your adviser to make a buy, hold or sell recommendation? If transaction costs are R2,50 per share, would you follow his advice?
ABC Co. believes that XYZ Corporation’s stock price is going to decline from its current level of ₱82.50 sometime during the next 5 months. For ₱510.25, ABC Co. could buy a 5 month put option for the right to sell 100 shares at a price of ₱83 per share. If ABC Co. bought a 100 share contract for ₱510.25 and XYZ Corporation’s stock price actually dropped to ₱63, what would be the net profit (after transactions costs but before taxes) of ABC Co.?a. ₱1,439.75b. ₱1,489.75c. ₱1,950.00d. ₱2,000.00e. ₱2,435.00
You are told by your investment advisor that Ladumo Co. is expected to earn R5 per share next year, R6 per share the following year and that thereafter earnings are expected to grow by 8% per year. The dividend payout ratio is 60% and the required rate of return on Ladumo shares is 15%. If the current share price is R40, would you expect your advisor to make a buy, hold or sell recommendation? If transaction costs are R2.50 per share, would you follow his advice?
A6) Jean has a margin account with a balance of $50,000. If the initial margin requirement is 50 percent, and Nicora is currently selling at $50 per share: · How many shares of Nicora Co can Jean buy? · If the maintenance margin is 25 percent, to what price can Nicora Co stock price fall before Jean receives a margin call? . what would be return if Jean sells shares at $60 after and broker charges 50 dollars per each transaction (ignore interest on debt and dividends)
Love Inc. believes that at its current share price of P16.00 the firm is undervalued. Makeover plans to repurchase 2.4 million of its 20 million shares outstanding. The Po Inc.’s managers expect that they can repurchase the entire 2.4 million shares at the expected equilibrium price after the repurchase. The Love Inc.’s current earnings are P44,000,000. If management’s assumptions hold, answer the following,1 .The current earnings per share is 2.What is the price to earnings ratio? 3.How much is the earnings per share after the repurchase? 4.What is the expected per-share market price after repurchase?
Love Inc. believes that at its current share price of P16.00 the firm is undervalued. Makeover plans to repurchase 2.4 million of its 20 million shares outstanding. The Po Inc.’s managers expect that they can repurchase the entire 2.4 million shares at the expected equilibrium price after the repurchase. The Love Inc.’s current earnings are P44,000,000. What is the expected per share market price after repurcharse?
Suppose that Nintendo Co., Ltd. (NTDOY) is currently trading at $180 per share. Mark buys 200 shares, using $23,000 of his own money and borrowing the remainder of the purchase price from his broker, Shin. If the maintenance margin is 45%, how far could the stock price fall before Mark would get a margin call? A. $131.31 B. $125.68 C. $121.59 D. $118.18
You have a margin account and deposit Rs.90,000. Assuming the prevailing marginrequirement is 20%, commissions are ignored and D.G.K Cement stock is selling atRs.55 per share while Askari Cement stock is selling at Rs. 85 per share. You invest 40%of your investment in D.G.K cement while remaining is deposited in Askari cement.a. How many shares of each stock can you purchase using the maximum allowablemargin if you invest in both?b. What is your total and percentage profit (loss) if:1. the price of D.G.K Cement Rises to Rs.65 per share while Askari Cement stockrises to Rs. 97 per share?2. the price of D.G.K Cement reduces to Rs.42 per share while Askari Cementstock reduces to Rs. 76 per share?c. If you invest all money in D.G.K cement ONLY and the maintenance margin is 25%,to what price can D.G.K Cement stock fall before you will receive a margin call?d. If you invest all money in Askari cement ONLY and the maintenance margin is 25%,to what price can Askari cement stock fall before you…
Andy has borrowed $370,000 on margin to buy Lowe`s Companies Inc., which is now trading at $203 per share. With this transaction, his initial percentage margin is 35%. His broker, Shannon, states, and Andy agrees, that the maintenance margin is 25%. Based on the given information, what is the equity value in account? A. $108,301 B. $147,621 C. $199,231 D. $232,650
One of the categories of options available to investors and speculators is LEPOs. Assuming 7.00 per cent margin, what would be the percentage return and dollar profit to an investor who purchased one LEPO (for 1000 shares) for a premium of $26 220 and later closed out the position when the LEPO premium was $28 430?
You are told by your investment advisor that Laduma Co. is expected to earn R5 per share next year, R6 per share the following year and that thereafter earnings are expected to grow by 8 percent per year. The dividend payout ratio is 60 percent and the required rate of return on Laduma shares is 15 percent. If the current share price is R40, would you expect your adviser to make a buy, hold or sell recommendation? If transaction costs are R2,50 per share, would you follow his advice? required: D(1) = D (3) = P(T) = P(0) = Buy/sell: Net Procceed: Buy/sell:
You are told by your investment advisor that Laduma Co. is expected to earn R5 per share next year, R6 per share the following year and that thereafter earnings are expected to grow by 8 percent per year. The dividend payout ratio is 60 percent and the required rate of return on Laduma shares is 15 percent. If the current share price is R40, would you expect your adviser to make a buy, hold or sell recommendation? If transaction costs are R2,50 per share, would you follow his advice? 16 D(1) = D (3) = P(T) = P(0) = Buy/sell: Net Procceed: Buy/sell:

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