just been issue is stock the news that comes out over the year. The stock will pay no dividends. Investors will sell the stock whenever the price goes up by more than 10%. a. Suppose good news comes out in 6 months (implying the takeover offer will be $73). What equilibrium price will the stock trade for after the news comes out, that is, the price that equates supply and demand? b. Assume that you are the only investor that does not suffer from the disposition effect and your trades are small enough to not affect prices. Without knowing what will actually transpire, what trading strategy would you instruct your broker to Tollow? a. Suppose good news comes out in 6 months (implying the takeover offer will be $73). What equilibrium price will the stock trade for after the news comes out, that is, the price that equates supply and demand? The equilibrium price is S. (Round to the nearest cent.) b. Assume that you are the only investor that does not suffer from the disposition effect and your trades are small enough to not affect prices. Without knowing what will actually transpire, what trading strategy would you instruct your broker to Tollow? anytime the price goes up by V 10%. (Select answers from drop-down menus.)

just been issue is stock the news that comes out over the year. The stock will pay no dividends. Investors will sell the stock whenever the price goes up by more than 10%. a. Suppose good news comes out in 6 months (implying the takeover offer will be $73). What equilibrium price will the stock trade for after the news comes out, that is, the price that equates supply and demand? b. Assume that you are the only investor that does not suffer from the disposition effect and your trades are small enough to not affect prices. Without knowing what will actually transpire, what trading strategy would you instruct your broker to Tollow? a. Suppose good news comes out in 6 months (implying the takeover offer will be $73). What equilibrium price will the stock trade for after the news comes out, that is, the price that equates supply and demand? The equilibrium price is S. (Round to the nearest cent.) b. Assume that you are the only investor that does not suffer from the disposition effect and your trades are small enough to not affect prices. Without knowing what will actually transpire, what trading strategy would you instruct your broker to Tollow? anytime the price goes up by V 10%. (Select answers from drop-down menus.)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 36P: The Darkroom Windowshade Company has 100,000 shares of stock outstanding. The investors in the firm...

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The Darkroom Windowshade Company has 100,000 shares of stock outstanding. The investors in the firm awn the following numbers of shares: investor 1 has 20,000 shares; investor 2 has 18,000 shares; investor 3 has 15,000 shares; investor 4 has 10,000 shares; investor 5 has 7,000 shares; and investors 6 through 11 have 5,000 shares each. What is the minimum number of investors it would take to vote to change the companys top management? If investors I and 2 agree to vote together, can they be certain of always getting their way in how the company will he run?
Explain why a financial investor in stocks cannot earn high capital gains simply by buying companies with a demonstrated record of high profits.
Suppose you expect a stock to pay a dividend of $10 every year forever and the discount rate is fixed at 5%. (a) What would you expect the price of the stock to be if it were priced according to its present value? (b) What happens to the price of the stock if the discount rate falls to 2%? (c) Now suppose you expect the dividend to grow by 1.5% every year, such that it will be $10.15 next vear. $10.30 the year after that, and so on. What are the new prices of the stock with 5% and 2% discount rates?
A Company's stock currently pays a dividend of $5 dollars per year and you expect that dividend to grow by 3% every year, forever, such that next year you expect the dividend to be 5.15, to be 5.3045 the year after that, and so on. If your discount rate is 9%, a fair price for this stock today is_____.If your discount rate were to fall to 7%, holding all else the same, the fair price of the stock would increase to_________.
After careful analysis, you have determined that a firm’s dividends should grow at 15%, on average, in the foreseeable future. The firm’s last dividend was $1.5. Compute the current price of this stock, assuming the required return is 20%
Please explain and give example how the futures market can reduce the chance that a trader can corner the market by delivery of a range of securities, and what's the meaning of "a trader can corner the market"? (Assume the reader only has some stock trading knowledge, you have to guide him to understand above mentioned topic easier)
Question A Call(50) = 9; Call(55) = 7; Put(50) = 7; Put(55) = 5. All options are on the same stock and have the same expiration time. Which strategy(s) yields arbitrage profit? A. Buy Call(50), sell Call(55) B. Sell Call(50), buy Call(55) C. Buy Put(50), sell Put(55) D. Sell Put(50), buy Put(55) E. Both A and C F. Both A and D G. Both B and C H. Both B and D . Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line.
TSC, Inc. sells for $23 and pays an annual per share dividend of $2.50, which you expect to grow at 7 percent. What is your expected return on this stock? What would be the expected return if the price were $40 a share? Round your answer to the two decimal places.
(a) You hold a consol that pays a coupon C in perpetuity. The current interest rate is i, and the average expectation in the market is that this will remain unchanged. What will be the price of the consol today? [1%] (b) In the next period however, the interest rate changes unexpectedly to i 0 . What is the new price of the bond? If the bond is sold at the beginning of that next period, what is the yield from the consol? Does the yield increase or decrease if i 0 > i? [4%] (c) Suppose alternatively that the market expects that the interest rate will change to i 0 after the initial period. What is the initial value of the consol, and what is the yield from selling it after one period? [5%]
“If stock prices did not follow a random walk, therewould be unexploited profit opportunities in themarket.” Is this statement true, false, or uncertain?Explain your answer.
What is the difference if any between an individual gambling at a casino and gambling by buying a stock? What is the difference for society? For an individual, gambling at a casino or by buying a stock A. is the same because they have the same expected values. B. is the same insofar that both involve uncertain outcomes C. different because the expected value of gambling in a casino is higher. 2. For society, gambling at a casino or by buying a stock A. is the same because neither redistribute income. B. is different because buying a stock more directly provides capital for companies to make productive investments. C. is the same because both have no effect on the budget deficit.
I need a simple explanation for question number 1 and 2 1. All other things being equal, if people want to buy more stock than people want to sell at the current price, the price of the stock will a. Increase b. Decrease c. Stay the same d. It is difficult to determine what the price will do. 2. For the current year, the expected dividend per share is: a. $0.25 b. $1.00 c. $2.00 d. $4.00