The expected return on Jeff's $260,000 stock portfolio is 24.3% and the dividend yield is 1.8%. How can Jeff generate homemade dividend income if he would prefer all of the return to be in the form of dividends? Jeff should sell 22.5% of his portfolio holdings every year There is no homemade dividend strategy that would match Tina's preferences Jeff should sell 7.6% of his portfolio holdings every year Jeff should sell 1.8% of his portfolio holdings every year Jeff should sell 24.3% of his portfolio holdings every year

The expected return on Jeff's $260,000 stock portfolio is 24.3% and the dividend yield is 1.8%. How can Jeff generate homemade dividend income if he would prefer all of the return to be in the form of dividends? Jeff should sell 22.5% of his portfolio holdings every year There is no homemade dividend strategy that would match Tina's preferences Jeff should sell 7.6% of his portfolio holdings every year Jeff should sell 1.8% of his portfolio holdings every year Jeff should sell 24.3% of his portfolio holdings every year

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 7FPE

See similar textbooks

Similar questions

Abigail Grace has a $900,000 fully diversified portfolio. She subsequently inherits ABC Company common stock worth $100,000. Her financial adviser provided her with the following estimates: Risk and Return Characteristics Expected Monthly Returns Standard Deviation of Monthly Returns Original Portfolio 0.67% 2.37% ABC Company 1.25 2.95 The correlation coefficient of ABC stock returns with the original portfolio returns in .40. If Grace sells the ABC stock, she will invest the proceeds in risk-free government securities yielding .42% monthly. Assuming Grace sells the ABC stock and replaces it with the government securities, calculate the Expected return of her new portfolio, which includes the government securities. Covariance of the government security returns with the original portfolio returns. Standard deviation of her new portfolio, which includes the government securities.
Rowena plans to purchase a stock that is currently paying no dividend. Rowena expects the stock to pay its first dividend of $5.00 per share in eight years. Furthermore, she expects the firm to have an ROE of 16% and a dividend pay-out ratio of 60% thereafter. What value should Rowena place on the stock now if her required return on the stock is 8.75%?
Abigail Grace has a $900,000 fully diversified portfolio. She subsequently inherits ABC Company common stock worth $100,000. Her financial adviser provided her with the following estimates: Risk and Return Characteristics Expected Monthly Returns Standard Deviation of Monthly Returns Original Portfolio 0.67% 2.37% ABC Company 1.25 2.95 The correlation coefficient of ABC stock returns with the original portfolio returns in .40. The inheritance changes Grace’s overall portfolio, and she is deciding whether to keep the ABC stock. Assuming Grace keeps the ABC stock, calculate the: Expected return of her new portfolio, which includes the ABC stock. Covariance of ABC stock returns with the original portfolio returns. Standard deviation of her new portfolio, which includes the ABC stock.
1. Pielago wants to purchase P400 par value, 20,000 preference shares from Placido Inc and plans to hold the shares long-term. The preference share has a constant dividend of P50 per share. Pielago requires a 20% return on all of her investment. What is the value of each preference share using the zero-growth model? 2. What is the importance of knowing the value of the preference share using the zero-growth model?
Lisa Lasher buys 440 shares of stock on margin at $15 per share. If the margin requirement is 60 percent, how much must the stock rise for her to realize a 20-percent return on her invested funds? (Ignore dividends, commissions, and interest on borrowed funds.) Round your answer to the nearest cent.
Sara is currently holding 75 shares of Apple, Inc. (AAPL), 16 shares of PayPal (PYPL), and 62 shares of DraftKings Inc. (DKNG) in her secret portfolio. To purchase fancy Christmas gifts, she is planning to short the 70 shares of AAPL and 16 shares of PYPL. As a result of this action, Sara’s portfolio would A. reduce the free cash flows. B. increase the volatility of returns. C. reduce the probability of high returns. D. increase the expected rate of return. Clear my choice
You have R40,000 to invest in Sophie Shoes, a stock selling for R80 a share. The initial margin requirement is 60 percent. Ignoring taxes and commissions, show in detail the impact on your rate of return if the stock rises to R100 a share and if it declines to R40 a share assuming: (a) you pay cash for the stock, and (b) you buy it using maximum leverage. 2. Lauren has a margin account and deposits R50,000. Assume the prevailing margin requirement is 40 percent, commissions are ignored, and the Gentry Wine Corporation is selling at R35 per share. a. How many shares can Lauren purchase using the maximum allowable margin? b. What is Lauren’s profit (loss) if the price of Gentry’s stock i. rises to R45? ii. falls to R25? c. If the maintenance margin is 30 percent, to what price can Gentry Wine fall before Lauren will receive a margin call? 3. Suppose you buy a round lot of Francesca Industries stock on 55 percent margin when the stock is selling at R20 a share. The broker charges a 10…
You have R40,000 to invest in Sophie Shoes, a stock selling for R80 a share. The initial margin requirement is 60 percent. Ignoring taxes and commissions, show in detail the impact on your rate of return if the stock rises to R100 a share and if it declines to R40 a share assuming: (a) you pay cash for the stock, and (b) you buy it using maximum leverage. 2. Lauren has a margin account and deposits R50,000. Assume the prevailing margin requirement is 40 percent, commissions are ignored, and the Gentry Wine Corporation is selling at R35 per share. How many shares can Lauren purchase using the maximum allowable margin? What is Lauren’s profit (loss) if the price of Gentry’s stock rises to R45? ii. falls to R25? If the maintenance margin is 30 percent, to what price can Gentry Wine fall before Lauren will receive a margin call? 3.Suppose you buy a round lot of Francesca Industries stock on 55 percent margin when the stock is selling…
Today, Andrew sold 3,600 shares of Colts stock for $26.60 per share. Andrew paid $101,124 for the 3,600 shares one year ago. What is the total return on this investment if the dividend yield is 1.90%?
Willis currently has $190,000 invested in a four-stock portfolio with a beta coefficient equal to 1.5. Willis plans to sell one of the stocks in his portfolio for $38,000, which will increase the portfolio's beta to 1.7. What is the beta coefficient of the stock Willis plans to sell? Do not round intermediate calculations. Round your answer to two decimal places.
Compute for the following problems. Show your solution. Assume you buy 100 shares of stock at Php40 per share on margin (40 percent). If the price rises to Php55 per share, what is your percentage gain on the initial equity? . In problem 1, what would the percentage loss on the initial equity be if the price had decreased to Php28? In 2015 Carlo Elise have several stocks that make-up his portfolio. Stock A with a price of P275.50 and shares outstanding of 2,500, for Stock B with a market value of P140,625.00 with 1,500 shares, for Stock C that has a market value of P279,450.00 at P155.25 and Stock D that has 150 shares outstanding with a market price of P475.00. In 2016, shares prices of Stock A and D go up by 20% while the others go down by a similar rate with additional purchase of 500 and 750 stocks for B and C respectively except for stock E that stays the same with a market value of P138,125 at 2,500 shares. a. How much is the total market value of the index for 2015? b. In…
Joseph is going to purchase two stocks to form the initial holdings in his portfolio. Iron stock has an expected return of 20 percent, while Copper stock has an expected return of 23 percent. - If Joseph plans to invest 30 percent of his funds in Iron and the remainder in Copper, what will be the expected return from his portfolio? - What would the expected return of David's portfolio invests 70 percent of his funds in Iron stock?