Consider a company JuiceStop who issues stocks to the public for the first time in 2022. JuiceStop provides two shares. During 2022, JuiceStop sells one of the two shares to Emily for $21,000. Later in the same year, Emily sells the share to Janet for $25,000. The second share, at a market value of $24,000, is sold to Jerome. JuiceStop uses all the funds that are financed via selling stocks to Emily and Jerome to purchase cutting-edge juicer mathines produced in the U.S. The transactions just described contribute how much to GDP for 20227 Briefly explain your answer.

Consider a company JuiceStop who issues stocks to the public for the first time in 2022. JuiceStop provides two shares. During 2022, JuiceStop sells one of the two shares to Emily for $21,000. Later in the same year, Emily sells the share to Janet for $25,000. The second share, at a market value of $24,000, is sold to Jerome. JuiceStop uses all the funds that are financed via selling stocks to Emily and Jerome to purchase cutting-edge juicer mathines produced in the U.S. The transactions just described contribute how much to GDP for 20227 Briefly explain your answer.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter31: Capital Markets

Section: Chapter Questions

Problem 2E

See similar textbooks

Similar questions

Stephanie Carter has been gifted a sum of $50,000 by her grandparents on completing her graduation successfully. She is a fresh finance graduate and is excited to invest some money in the capital market, for which she intends to use the gifted sum of $50,000. However, instead of committing this money to the market immediately, she decides to wait for some time, work in the field and acquire some experience before proceeding with her intended investment. She thus contemplates an extremely conservative investment in a portfolio of stocks and bonds, at the start of year 5 from now. For now, she will leave the $50,000 in a fixed deposit with the bank which promises an interest rate of 6% per annum. She will require a return of at least 9% on her stock investments and 4% on bond investments. Stephanie would have to pay 25% taxes on any interest income. Dividends will be tax-free. Stephanie’s research has allowed her to narrow down on the following investment candidates: Stocks:…
Consider an economy where Capital Asset Pricing Model holds. In this economy, stocks A and B have the following characteristics: • Stock A has and expected return of 22% and a beta of 2. • Stock B has an expected return of 15% and a beta of 0.8. The standard deviation of the market portfolio’s return is 18%. (a) Assuming that stocks A and B are correctly priced according to the CAPM, compute the risk-free rate and the market risk premium.
A firm is expected to pay a dividend of $1.35 next year and $1.50 the following year. Financial analysts believe the stock will be at their price target of $68 in two years.Compute the value of this stock with a required return of 10 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
True or False: Increasing the number of stocks in a portfolio reduces firm-specific risk. TrueFalseConsider two stock portfolios. Portfolio A consists of 20 different stocks from firms in different industries. Portfolio B consists of four different stocks, also from firms in different industries. The return on Portfolio A is likely to be volatile than that of Portfolio B.Suppose a stock analyst recommends buying stock in the following companies:Company IndustryToyonda AutomotiveSaalvo AutomotiveGMW AutomotiveHonsubishi AutomotiveShexxon Oil and gasMobron Oil and gasAiring AircraftBoebus AircraftGoohoo TechnologyPherk PharmaceuticalEach of the following portfolios contains four of the stock picks. Which portfolio is the least diversified? Pherk, Airing, Goohoo, ShexxonToyonda, Honsubishi, Boebus, AiringToyonda, Saalvo, GMW, HonsubishiBoebus, Airing, Shexxon, Mobron
You and your workmates have come together to form an investment group called Pamodzi Investments; requiring each member to make monthly deposits into a pool account. You are planning to use these funds to create a portfolio of investments in preparation for your retirements.Todate, the balance in the pool account amounts to K1.5 million and you are about to make your first investment. However, there is a challenge due to different preferences of which securities to invest in. Others prefer money market securities on the back of strong recent performance. Those preferring capital securities are citing the fact that these are long term and appropriate for retirement planning.As a way towards consensus, a colleague proposes to consider the Collective Investment schemes that are available on the market. He has heard that this is a better way of accessing diversification benefits for small investors.As an Investment Analyst in the group, you have been approached by your colleagues to advise…
Which of the following statements about the current value of a short European call option on Warwick plc stock, a non-dividend-paying stock, is/are true? (a) The current value of a short European call option is less than or equal to zero. (b) The current value of a short European call option decreases as the volatility of returns on Warwick plc stock increases, holding all else constant. (c) The current value of a short European call option decreases as the price of Warwick plc stock increases, holding all else constant.
Consider a certain butterfly spread on IBM: this is a portfolio that is long one call at $250, long one call at $270, and short 2 calls at $260. Assume expiration of all options is at the same time $T=2$. If today the calls cost $10.00, $5.00, and $1.00 for the strikes at 250, 260, and 270, respectively, what will be the profit or loss from buying this spread if the stock turns out to be trading at $255 at time $T$? Assume the risk-free rate is 5%. Select one: a. 3.28 b. 3.01 c. 4.09 d. 3.89
Questions: Compute the expected intrinsic price of each stock in year 5. Assume that All stocks are fairly priced such that the intrinsic and market values are equal. Dividends are paid at the beginning of the year How many units of each stock will Stephanie buy? Support your response with relevant computations. What will be the total investment cost for shares? Show appropriate calculations. Which bonds are acceptable for investment? Justify your response with suitable computations. What will be the total cost of investment in bonds? Do the stock and bond investments fall within Stephanie’s investment guidelines? Show appropriate computations in support of your response. Will Stephanie have enough funds for her investment in stocks and bonds, when needed? What will be the surplus / shortfall, if any? Given that Stephanie’s bank offers an interest rate of 6% per year, what additional amount should she have deposited as a fixed…
Stock A has a price of $60 per share and you own 360 shares. Stock B has a price of $250 per share and you own 65 shares. What is the weighted average stock price in your portfolio? Round to 2 decimal places and do not include the dollar sign.
You expect KT Industries (KTI) will have earnings per share of $4.6 this year and expect that they will pay out $1.66 of these earnings to shareholders in the form of a dividend. KTI's return on new investments is 11% and their equity cost of capital is 16%. KTI's dividend growth rate is _________ (Round to two decimal places) If KTI's dividend growth rate will remain constant, and KTI's next year dividend is $1.78, then KTI's current stock price should be ________ (Round to two decimal places)
Elizabeth has decided to form a portfolio by putting 30% of her money into stock 1 and 70% into stock 2. She assumes that the expected returns will be 10% and 18%, respectively, and that the standard deviations will be 15% and 24%, respectively. Describe what happens to the standard deviation of the portfolio returns when the coefficient of correlation ρ decreases. The standard deviation of the portfolio returns decreases as the coefficient of correlation decreases. The standard deviation of the portfolio returns increases as the coefficient of correlation increases. The standard deviation of the portfolio returns decreases as the coefficient of correlation increases. The standard deviation of the portfolio returns increases as the coefficient of correlation decreases.
On the advice of your uncle, you purchased 10 shares of a well-established U.S.-based corporate stock for $21 per share. After 1 quarter, you received $0.25 per share dividends each quarter for 2 years. At that point, the stock price had gone down in a short-term recession, so you purchased 10 more shares at $18 per share. The stock continued to pay 25¢ a share on all 20 shares. After 3 years (12 quarters), you decided to sell the stock since it had increased in market value to $24 per share. Make the following assumptions: (a) no commissions for the purchase or sale of the stock, (b) no government taxes on the dividends, and (c) quarterly compounding of the rate of return. What is the effective interest rate per year? The effective interest rate per year is %.