21. A stock market analyst observes the following for the price of two stocks that he owns, one of which is increasing at an exponential rate (geometric) and the other is increasing in alinear fashion (arithmetic).Stock A: Equation: an 15n + 143, where an is the value of the stock and n is the number of years.Year Price12345Year12Stock B: Equation: a = 24(1.1)”−¹, where an is the value of the stock and n is the number of years.34$158.005$173.00$188.00$203.00$218.00Price$24.00$26.40$29.04$31.94$35.14Assuming these stock values continue to increase in the same manner until retirement, which stock option is worth more in 50 years and how much more is this stock worth per share?

Data given: Stock A: Equation: an=15n+143 Stock B: Equation: an=24*(1.1)n-1

21. A stock market analyst observes the following for the price of two stocks that he owns, one of which is increasing at an exponential rate (geometric) and the other is increasing in a linear fashion (arithmetic). Stock A: Equation: an = 15n+ 143, where an is the value of the stock and n is the number of years. Year Price 1 2 3 4 5 1 Stock B: Equation: a = 24(1.1)”—¹, where an is the value of the stock and n is the number of years. Year Price 2 3 4 $158.00 $173.00 5 $188.00 $203.00 $218.00 $24.00 $26.40 $29.04 $31.94 $35.14 Assuming these stock values continue to increase in the same manner until retirement, which stock option is worth more in 50 years and how much more is this stock worth per sha

21. A stock market analyst observes the following for the price of two stocks that he owns, one of which is increasing at an exponential rate (geometric) and the other is increasing in a linear fashion (arithmetic). Stock A: Equation: an = 15n+ 143, where an is the value of the stock and n is the number of years. Year Price 1 2 3 4 5 1 Stock B: Equation: a = 24(1.1)”—¹, where an is the value of the stock and n is the number of years. Year Price 2 3 4 $158.00 $173.00 5 $188.00 $203.00 $218.00 $24.00 $26.40 $29.04 $31.94 $35.14 Assuming these stock values continue to increase in the same manner until retirement, which stock option is worth more in 50 years and how much more is this stock worth per sha

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Am. 132.
Consider the following information: State Probability Stock A Stock B Stock C Boom 0.32 0.09 -0.01 0.01 Bust 0.68 -0.05 0.28 0.03 What is the expected return of a portfolio that has invested $9,981 in Stock A, $6,817 in Stock B, and $2,123 in Stock C? (Hint: calculate weights of each stock first). Enter the answer with 4 decimals (e.g. 0.1234).
Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period. A B C Po 82 42 84 00 100 200 200 Divisor P1 87 37 94 01 100 200 200 P2 87 37 47 92 100 200 400 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t= 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Rate of return I % b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places.) D c. Calculate the rate of return of the price-weighted index for the second period (t=1 to t = 2).
(10). The table below presents the price of stock A and the points of a market index over the last four moths. Month 1 3 4 A 100 105 108 103 1112 1150 1200 1190 a. The holding period logarithmic return of stock A equals: A. 12%; B. 8.85%; C. 13,97%; D. b. The beta coefficient of stock A equals: A. 0,64; B. 0,19; C. 1,64; D. ...... % c. The estimated alpha coefficient from the market model equals d. The coefficient of determination from the market model equals
The index model has been estimated for stocks A and B with the following results: = 0.12 +0.670RM+еA RA= RB=0.04 +1.512RM + еB °M= 0.330 σ(eд) = 0.20 σ(eB) = 0.10 What is the covariance between each stock and the market index? (Round your answers to 4 decimal places.) Stock A covariance Stock B covariance
Consider three stocks, X, Y, and Z, in the following table. P0, P1, and P2 represent prices at time 0, 1, and 2. Q0, Q1, and Q2 represent shares outstanding. Stock Z splits two for one in the last period. Stocks PO Q0 P1 Q1 P2 Q2 ? X 90 100 95 100 95 100 Y 50 200 60 200 45 200 Z 100 200 110 200 55 400 Using the above information to compute an equally weighted average returns in the three stocks from periods 1 to 2 0% O-1.85% -8.33% -25.00%
A stock has had the following year-end prices and dividends: Year Price Dividend 1 $ 65.13 — 2 72.00 $ .76 3 77.80 .81 4 64.07 .87 5 74.71 .96 6 87.75 1.03 What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Consider the three stocks in the following table. P+ represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period. PO 98 58 100 51 103 e 200 116 200 53 126 100 200 200 103 100 53 63 200 400 Required: Calculate the first-period rates of return on the following indexes of the three stocks: (Do not round Intermediate calculations. Round your answers to 2 decimal places.) a. A market value-weighted Index Rate of return An equally weighted index ate of return % %
Suppose a market consists of four stocks. The number of shares outstanding for each stock as well as the stock prices in two consecutive days are as follows: Stock A Stock B Stock C Stock D Shares outstanding 200 1000 400 3000 I $5 $30 $100 $40 Ро $15 $25 $80 $50 a) Compute the percentage increase in the price-weighted index for this market. b) Compute the percentage increase in the value-weighted index for this market. P₁
A stock has had the following year-end prices and dividends: Year Price 0 012345 1 $ 15.00 17.18 18.18 16.68 19.02 22.13 Dividend $ 0.15 0.38 0.40 0.42 0.48 What are the arithmetic and geometric returns for the stock? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Arithmetic return Geometric return % %
Vijay
Consider the three stocks in the following table. P(t) represents price at time t, and Q(t) represents shares outstanding at time t. Stock C splits two-for-one in the last period. What is the rate of return for the price-weighted index that is formed using Stocks A, B, and C from time period 1 to time period 2? B C zero P(1) 95 45 100 -20.83% 20.83% None of the above Q(1) 100 200 200 P(2) 95 45 50 Q(2) 100 200 400

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