You invest funds in a stock market index fund whose share price is currently K100, and your time horizon is one year. You expect the cash dividend during the year to be K4. Suppose your best guess is that the share price will be K110. Calculate the following: expected dividend yield; holding period return (HPR); Capital gains yield and total holding period rate of return. (b) You buy a K10 000 face value Treasury Bill in one month for K9 900. Calculate your holding period return.

You invest funds in a stock market index fund whose share price is currently K100, and your time horizon is one year. You expect the cash dividend during the year to be K4. Suppose your best guess is that the share price will be K110. Calculate the following: expected dividend yield; holding period return (HPR); Capital gains yield and total holding period rate of return. (b) You buy a K10 000 face value Treasury Bill in one month for K9 900. Calculate your holding period return.

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

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 1FPE: What makes for a good investment? Use the approximate yield formula or a financial calculator to...

See similar textbooks

Similar questions

You invest funds in a stock market index fund whose share price is currently K100, and your time horizon is one year. You expect the cash dividend during the year to be K4. Suppose your best guess is that the share price will be K110. Calculate the following: expected dividend yield; holding period return (HPR); Capital gains yield and total holding period rate of return.
You invest funds in a stock market index fund whose share price is currently K100, and your time horizon is one year. You expect the cash dividend during the year to be K4. Suppose your best guess is that the share price will be K110. Calculate the following: expected dividend yield; holding period return (HPR); Capital gains yield and total holding period rate of return. Further, You buy a K10 000 face value Treasury Bill in one month for K9 900. Calculate your holding period return.
Suppose you have $100,000 in cash, and you decide to borrow another $25,000 at a 6% interest rate to invest in the stock market. You invest the entire $125,000 in a portfolio J with a 24% expected return and a 26% volatility. What is the expected return and volatility (standard deviation) of your investment? What is your realized return if J goes up 13% over the year? What return do you realize if J falls by 26% over the year?
Suppose you have $10,000 in cash and you decide to borrow another $10,000 at a(n) 6% interest rate to invest in the stock market. You invest the entire $20,000 in an exchange-traded fund (ETF) with a 11% expected return and a 20% volatility. What is your expected return on your investment?
Suppose you have $200,000 in cash, and you decide to borrow another $24,000 at a 6% interest rate to invest in the stock market. You invest the entire $224,000 in a portfolio J with a 21% expected return and a 27% volatility. a. What is the expected return and volatility (standard deviation) of your investment? b. What is your realized return if J goes up 39% over the year? c. What return do you realize if J falls by 35% over the year? a. What is the expected return and volatility (standard deviation) of your investment? The expected return of your investment is ☐ %. (Round to two decimal places.)
Suppose you have $375,000 in cash, and you decide to borrow another $63,750 at a 7% interest rate to invest in the stock market. You invest the entire $438,750 in a portfolio J with a 20% expected return and a 28% volatility. a. What is the expected return and volatility (standard deviation) of your investment? b. What is your realized return if J goes up 39% over the year? c. What return do you realize if J falls by 19% over the year?
Suppose you are thinking of purchasing the stock of Moore Oil, Inc. and you expect it to pay a $2 dividend in one year and you believe that you can sell the stock for $14 at that time. If you require a return of 20% on investments of this risk, what is the maximum you would be willing to pay?
Suppose you buy OMR2000 worth of stock on margin. The initial margin is 60% and the maintenance margin is 30%. a. How much have you borrowed? What is your equity? b. Suppose the value of the stock rises by 15% to OMR2300. What is the return on your investment? c. Suppose the value of the stock falls by 15% to OMR1700. What is the return on your investment? d. Does buying a stock on margin increase or decrease your risk of investment? Use the results in parts b and c to answer the question.
Suppose that one year ago, you invested in a stock market portfolio, which is currently worth £62,000. You are convinced the portfolio is well-diversified and fitted to your profile as an investor, and the beta of your portfolic is 0.9. You are planning to hold this portfolio for at least another three years. Suppose that the current level of FTSE100 is 1850, and the risk - free interest rate is 1.5% a) Iderdify any relevant risk that you may be facing in reference to your investment portfolio. b) Suppose there is a two year FTSE100 futures contract available. The futures price is 1855, and one contract is for £10 times the index: How many contracts would you need to eliminate the exposure to the market over the next two years? What position in these contracts would you take today? c) Evaluate the out comes of your hedging strategy if FTSE100 in two years'time is 1842. Comment on your results.
If you buy a stock for a price of $23 and if you expect the stock to pay a dividend of $1.242 one year from now and to grow at a constant rate g = 8% in the future, then the required rate of return will be __________.
An investment analyst has purchased a CEC stock today for K1000.He intends to hold the stock for four years and collect K50 in dividends each year. At the end of the fourth year, he expects to be able to sell the stock for K1,500.What is the Money weighted return on this investment portfolio?
You have $100,000 to invest in either Stock D, Stock F, or a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 11.8 percent. Assume D has an expected return of 15.3 percent, F has an expected return of 11.2 percent, and the risk-free rate is 6.15 percent. If you invest $50,000 in Stock D, how much will you invest in Stock F? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. X Answer is complete but not entirely correct. $ -16,260.16 x Amount of Stock F to buy