You have $32,000 you would like to invest in two different stocks, Stock Boll and Stock Coff. The buying limit on Stock Coff is $13,200 and you want tospend at least four times as much money on Stock Boll as Stock Coff.If Stock Boll earns 9% annual interest and Stock Coff earns 4% annual interest, how much money (in dollars) should you invest in each stock to maximizeyour annual interest earned? What is the maximum annual interest (in dollars)?You will earn a maximum total annual interest of $if you invest $in Stock Boll and $in Stock Coff,

The question is based on the concept of Financial Management.

Answered: You have $32,000 you would like to…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

Suppose you have $39,000 you would like to invest in two different stocks, Stock Boll and Stock Coff. The buying limit on Stock Coff is $12,300 and you want to spend at least two times as much money on Stock Boll as Stock Coff. If Stock Boll earns 7% annual interest and Stock Coff earns 4% annual interest, how much money (in dollars) should you invest in each stock to maximize your annual interest earned? What is the maximum annual interest (in dollars)?
How am I supposed to solve for the max interest? You have $39,000 you would like to invest in two different stocks, Stock Boll and Stock Coff. The buying limit on Stock Coff is $11,400 and you want to spend at least three times as much money on Stock Boll as stock Coff. If Stock Boll earns 9% annual interest and Stock Coff earns 4% annual interest, how much money should you invest in each stock to maximize your annual interest earned? What is the maximum annual interst?
You have $92,000 you would like to invest in three different stocks: MarkyB Inc., JohnJohn Ltd., and Garretts Spaghetti House. You would like to invest no more than $15,000 in Garretts Spaghetti House, and you want the amount you invest in MarkyB Inc., to be at least the amount invested in JohnJohn Ltd. and Garretts Spaghetti House combined. If MarkyB Inc. earns 18% annual interest, JohnJohn Ltd. earns 13% annual interest, and Garretts Spaghetti House earns 6% annual interest, how much money (in dollars) should you invest in each stock to maximize your annual interest earned? What is the maximum annual interest earned? You should invest $ _ into MarkyB Inc., $ _ into JohnJohn Ltd., and $ _ into Garretts Spaghetti House, which will give you give you maximum annual interest $ .
In you cash account, you buy 100 shares of XYZ Corporation at a price of $10 per share. Two months later, XYZ pays a dividend $0.21 per share. You sell all 100 shares of XYZ three months later at a price of $12 per share. What is your total return on this trade in dollar amount?
The stock of Suncor Energy is currently trading for $36 per share. An investor expects the stock price to move up in the next two months, and decided to invest $7, 200 in this stock. If the investor invests all the money in the stock, how much is the profit or loss if the stock price in two months turns out to be i) 40 or ii) 32? If the investor invests all the money in call options with a strike price of $35 and price of the call is $2 per share, how much is the profit or loss if the stock price in two months turns out to be i) 40 or ii) 32?
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 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…
You own 1,000 shares of stock in Avondale Corp. You will receive a $.80 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $45 per share. The required return on Avondale stock is 10 percent. a. What is the current share price of your stock (ignoring taxes)? b. If you would rather have equal dividends in each of the next two years by creating homemade dividends, what would be the cash flow for Year 1 and Year 2?
You are offered a chance to purchase shares in a new company which sells franchises for MamaC Pizza. Your stock broker estimates that in one year the shares will be worth 277 and will also provide a $2 annual dividend. The prevailing interest rate is 8 %. How much should you be willing to invest to to pay for one share of stock?
you own 1,000 shares of stock in Avondale Corporation. You will receive a $2.30 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $53 per share. The required return on Avondale stock is 15 percent. What is the current share price of your stock (ignoring taxes)? If you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade dividends. Hint: Dividends will be in the form of an annuity. suppose you want only $750 total in dividends the first year. What will your homemade dividend be in two years?

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Pfin (with Mindtap, 1 Term Printed Access Card) (…

Finance

ISBN:

9780357033609

Author:

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

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Pfin (with Mindtap, 1 Term Printed Access Card) (…

Finance

ISBN:

9780357033609

Author:

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

Publisher:

Cengage Learning

SWFT Essntl Tax Individ/Bus Entities 2020

Accounting

ISBN:

9780357391266

Author:

Nellen

Publisher:

Cengage

SEE MORE TEXTBOOKS