ou are bullish on Telecom stock. The current market price is $250 per share, and you have $22,000 of your own to invest. You borrow an additional $22,000 from your broker at an interest rate of 6% per year and invest $44,000 in the stock. Required: What will be your rate of return if the price of Telecom stock goes up by 16% during the next year? The stock currently pays no dividends.
Q: Which of the following is NOT a common element among financial planning models? Select an answer and…
A: Financial planning model is a comprehensive model that helps one to determine or to identify how…
Q: iven the time series of historical stock returns below, what is the standard deviation? (Hint: the…
A: Variables in the question:Time Period 1 2 3 4 5return (%) 5% -7% 12% 13% -3%
Q: our Christmas ski vacation was great, but it unfortunately ran a bit over budget. All is not lost:…
A: a.Current value = $15,300Annual rate = 19.9%Monthly payment = $320Calculation of number of months…
Q: Problem 9-09 S&P Industrials years 17.00 0.08 0.05 Kayleigh: Industries 25.00 0.12 0.02 P/E ratios…
A: Implied growth duration is the timeframe that is needed for an investor to get back his/her…
Q: A professor has two daughters that he hopes will one day go to college. Currently, in-state students…
A: Financial planning is required for the payments required in the future and proper planning for…
Q: alculate the Present Value given the following: Jill invests $5,000 at the end of year 1, and every…
A: We need to use present value formula below to calculate present valuePresent value =Future value/( 1…
Q: Investing activities Acquisition of fixed assets Sale of fixed assets Total cash flow from investing…
A: ($ in millions)The EBIT is The operating cash flow is
Q: A new project involves the purchase of a $9000 food processing machine. The machine would be…
A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…
Q: Tim Houston purchased a wall unit for $2,300. He made a $800 down payment and financed the balance…
A: The cost of loans from various lenders or credit cards with differing terms and charge structures…
Q: Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $8 million. The machinery…
A: Market value of Machinery= $7.4 millionBook value of Net Fixed Assets=$6 millionBook value of…
Q: A person deposits $2,000 in an account each year for five years (starting at the end of year one).…
A: A CF diagram is an indication of how the cash is flowing into and outside of an investment through a…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Given information,Time: yearsInitial investment: millionRate: Cash flow in each year: millionTo…
Q: Evans Industries wishes to select the best of three possible machines, each of which is expected to…
A: NPV is also known as Net Present Value. It is a capital budegting technique which helps in decision…
Q: A T-Bill currently sells for $98.5000 per $100 of face value. It has 180 days remaining until…
A: A treasury bill is a kind of debt security issued by the government and private companies to the…
Q: Creating an endowment Personal Finance Problem On completion of her introductory finance course,…
A: a. Cost of taking the finance class today = $500 per student ($1,500 for 3 students)Growth rate =…
Q: Loan amortization schedule Personal Finance Problem Joan Messineo borrowed $42,000 a interest to be…
A: Given information,Amount borrowed: Annual rate: Time: yearsTo calculate,Payment per…
Q: Consider the three stocks in the following table. Pt represents price at time t, and Qt represents…
A: StocksPrice at time=0Shares outstandingPrice at time= 1Outstanding shares at 1Price at time= 2Shares…
Q: Suppose a firm is issuing bonds. Each bond has a face amount of $1,000, a stated rate of 8%, and a…
A: Face Value = fv = $1000Coupon Rate = 8%Time = nper = 10 yearsPrice of Bond = pv = $1015
Q: Michael Sanchez purchased a condominium for $97,000. He made a 20% down payment and financed the…
A: Here,Cost of Condominium is $97,000Down Payment is 20%Therefore, Loan Amount (PV) is :Interest Rate…
Q: The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 9…
A: Bond price will be the aggregate of present value of all coupon payments and present value of face…
Q: ssume that the starting salary for a computer programmer in the United States is C$75,000 compared…
A: Present value is the equivalent value today of the future cash flow based on time value of money and…
Q: A sum of $10,000 now (time 0) is equivalent to the following cash flow diagram. What is the value of…
A: The PV of an investment refers to the combined value of the cash flows discounted to the present at…
Q: Kim Epson operates a full-service car wash, which operates from 8 A.M. to 8 P.M. seven days a week.…
A: Pretax contribution = $5.00 per carThe number of cars handled at interior cleaning station is…
Q: The Baron Basketball Company (BBC) earned $11 a share last year and paid a dividend of $6 a share.…
A: The payout ratio is calculated belowThe expected dividend per share in year 1 is calculated as
Q: A coupon bond that pays semiannual Interest is reported in the Wall Street Journal as having an ask…
A: A bond is a financial instrument issued in the debt market by large business firms and governments…
Q: Alex Karev has taken out a $210,000 loan with an annual rate of 11 percent compounded monthly to pay…
A: Present value of annuity formula.PV = A * wherePV = Present value of annuityA = periodic paymentsr =…
Q: Suppose that you are 25 years old and you plan to begin contributing to a retirement fund earning…
A: In retirement planning one needs to calculate how much amount is needed for retirement and then…
Q: What is locals net profit margin?
A: Net profit margin =
Q: a) Calculate the amount that Yankee Co needs to pay lo settle the FRA on the settlement date b)…
A: A party is looking to hedge the interest rate in the future through a forward rate agreement (FRA).…
Q: You have been asked to analyze the bids for 200 polished disks used in solar panels. These bids have…
A: No. of polished Disks200Thailand Polishing2000.00BhatIndia shine2000.00RupeeSacramento…
Q: You have been tasked with using the FCF model to value Julie's Jewelry Co. After your initial…
A: Equity beta = 1.5Debt-to-equity ratio = 0.5Tax rate = 21%Risk free rate = 4%Market risk premium =…
Q: Old Economy Traders opened an account to short sell 1,500 shares of Internet Dreams at $50 per…
A: Variables in the question:Short sell 1500 shares of Internet Dreams @ $50 per shareInitial margin…
Q: Bandon Manufacturing intends to issue callable, perpetual bonds with annual coupon payments and a…
A: The coupon rate refers to the rate at which the bond issuer will pay interest on the bond at equal…
Q: Question 14 ( Bobby bought a house for $275,000 by putting 15% down and borrowing the balance. His…
A: Given information,Total amount: Down payment: Years: yearsRate:
Q: Investment B: -$1 million The timeline of an investment is A. 0.184 OB. 0.167 OC. 0.67 OD. 0.418
A: Profitability index is the most used capital budgeting method based on the time value of money and…
Q: Jenny Rene, the CFO of Asor Products, Inc., has just completed an evaluation of a proposed capital…
A: Traditional NPV (Net Present Value) focuses on evaluating the financial feasibility of a project…
Q: Emily is trying to decide between investing $1,000 or $1,500 at the beginning of each year for the…
A: Future value of money is the amount of deposit done and the amount of compounded interest…
Q: Use the information below to answer the questions that follow. 0.5. EQUIVALENT Japanese yen Japanese…
A: Exchange are quite volatile and changing very fast. The exchange rate depends on the supply and…
Q: A couple is saving for retirement with three different accounts. The table below shows the current…
A: An annuity refers to a series of periodic payments made in exchange for a lump sum payment. It is…
Q: Suppose a 5% coupon, 4 year bond is selling for $990. The face value is $1000. The coupon is paid…
A: A technique that is adopted by investors with the intention of formulating the intrinsic value of a…
Q: Someone in the 36 percent tax bracket can earn 7 percent annually on her investments in a tax-exempt…
A: Here,One Time Investment is $18,000Tax Rate is 36%Interest Rate is 7%
Q: Explain the concept of distributed transactions and the challenges involved in implementing them…
A: Distributed transactions refer to a type of transaction in a distributed computing environment where…
Q: n the context of asset pricing, the finance literature implies that an investor will be indifferent…
A: Bonds are the source of investment in which annual interest payments are paid and par value is paid…
Q: Norweign Cruise Line Holdings. operates three cruise lines, Norweign Cruise Lines, Oceania Cruises,…
A: Net working capital is the capital that is used to meet day-to-day operations. Moreover, gross…
Q: Calculate NPV, present value ratio, and payback Cowboy Recording Studio is considering the…
A: Net present value - The net present value is one of the most commonly used technique of capital…
Q: Suppose the 180-day futures price on gold is $110.00 per ounce and the volatility is 20.0%. Assume…
A: Black-Scholes Option Pricing Model is a quantitative approach to determine the value of a European…
Q: Nonconstant Growth Stock Valuation Assume that the average firm in your company's industry is…
A: Value of the stock can be determined by calculating the present value of the dividend and present…
Q: you work for a pharmaceutical comapny that developed a new drug. The patent on the drug will last 17…
A: Annuity is the series of equal cash payments over the period.
Q: Titan Mining Corporation has 7.5 milion shares of common stock outstanding, 250,000 shares of 4.2…
A: A company's average after-tax cost of capital from all sources, including common stock, preferred…
Q: The real risk-free rate is 1.95%. Inflation is expected to be 2.95% this year, 4.25% next year, and…
A: Treasury notes are issued by the federal central bank and are quite risk The rate of return depends…
You are bullish on Telecom stock. The current market price is $250 per share, and you have $22,000 of your own to invest. You borrow an additional $22,000 from your broker at an interest rate of 6% per year and invest $44,000 in the stock.
Required: What will be your
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 3 images
- You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per year and invest $10,000 in the stock.a. What will be your rate of return if the price of Telecom stock goes up by 10% during the next year? The stock currently pays no dividends.b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately.You are bullish on Telecom stock. The current market price is $80 per share, and you have $12,000 of your own to invest. You borrow an additional $12,000 from your broker at an interest rate of 6% per year and invest $24,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 15% during the next year? The stock currently pays no dividends. (Negative value should be indicated by a minus sign. Round your answer to the nearest whole number.) b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately. (Round your answer to 2 decimal places.)You are bullish on IT stock. The current market price is OMR70 per share, and you have OMR8,000 of your own to invest. You borrow an additional OMR7,000 from your broker at an interest rate of 7% per year and invest OMR15,000 in the stock. What will be your rate of return if the price of Telecom stock goes up by 15% during the next year? The stock currently pays no dividends. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately.
- You think that the stock of Fleetwood Corp is likely to rise within the next six months from its current price ($19.00 bid and $20.00 ask), and you want to maximize the amount of profit from your investment. So, you will use a margin account to borrow on margin in order to buy as many shares as you can. Your initial margin requirement is 45%, and you have $90,000 of your own money to invest in the shares. The minimum (maintenance) margin is 30%, and Fleetwood does not pay dividends. (Ignore interest for this problem.) If you buy Fleetwood on margin with the maximum margin loan, what is the maximum number of shares you can buy? Suppose you bought the maximum number of shares of Fleetwood as in (1). Assume that immediately after your purchase, Fleetwood’s share price drops to $18.00 per share. Calculate your new margin. Will you receive a margin call? How far can the price drop before you will receive a margin call? If the stock price falls to $14.00, you calculate that you would…You are bullish on Telecom stock. The current market price is $110 per share, and you have $22,000 of your own to invest. You borrow an additional $22,000 from your broker at an interest rate of 6.6% per year and invest $44,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 8% during the next year? (Ignore the expected dividend.) (Round your answer to 2 decimal places.) b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediate ly. (Round your answer to 2 decimal places.)Suppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account. a. if you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: $22, $20, and $18? Assume that Xtel's pays no dividends. b. If the maintenance margin is 25%, how high can Xtel's price rise before you get a margin call? c. Redo parts a and b but now assume that Xtel has paid a year end dividend of $1 per share. The pruces in part a should be interpreted as ex-dividend, that is prices after the dividend has been paid.
- You are bullish on Telecom stock. The current market price is $62 per share, and you have $6,200 of your own to invest. You borrow an additional $6,200 from your broker at an interest rate of 7.6% per year and invest $12,400 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 9% during the next year? (Ignore the expected dividend.) (Round your answer to 2 decimal places.) Rate of return % b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30% ? Assume the price fall happens immediately. (Round your answer to 2 decimal places.) Stock price falls below.You are bullish on XYZ stock. The current market price is $100 per share, and you have $10,000 of your own to invest. You borrow an additional $10,000 from your broker at an interest rate of 8% per year and invest $20,000 in the stock. WHAT IS THE margin call if the maintenance margin is 30%? Assume the price IS $115 one year LATER.Suppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account.a. If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: (i) $22; (ii) $20; (iii) $18? Assume that Xtel pays no dividends.b. If the maintenance margin is 25%, how high can Xtel’s price rise before you get a margin call?c. Redo parts (a) and (b), but now assume that Xtel also has paid a year-end dividend of $1 per share. The prices in part (a) should be interpreted as ex-dividend, that is, prices after the dividend has been paid.
- .Suppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account. a.If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: (i) $22; (ii) $20; (iii) $18? Assume that Xtel pays no dividends. b.If the maintenance margin is 25%, how high can Xtel’s price rise before you get a margin call? c.Redo parts (a) and (b), but now assume that Xtel also has paid a year-end dividend of $1 per share. The prices in part (a) should be interpreted as ex-dividend, that is, prices after the dividend has been paid.13.Jenny Banks is interested in buying the stock of Fervan, Inc., which is increasing its dividends at a constant rate of 9.0 percent. Last year the firm paid a dividend of $2.65. The required rate of return is 17.0 percent. What is the current value of this stock? What should be the price of the stock in year 5?You are bearish on Ali baba’s stock and decide to sell short 100 shares at the current market price of $50 per share. a. How high can the price of the stock go before you get a margin call if the maintenance margin is 40% of the value of the short position? b. Assume a year later the price of Ali Baba’s stock risen from $50 to $60 and the stock has paid a dividend of $2 per share. What is the rate of return from Ali Baba’s stock?