You recently purchased a round lot (100 shares) of ABC stock that offered an attractivedividend. The stock cost $50 per share and offered an annualized dividend of $4.00 per sharethat is paid quarterly ($1.00 per share, per quarter). Assuming you reinvested your dividendswhen they were received each quarter into a mutual fund expected to provide a nominal 12%return compounded quarterly and then sold the stock for $75 per share at the end of the 5thyear, calculate the overall growth rate of return on this 5-year investment. Round your cashflow calculations to the dollar.

Dividends: The portion of the company's profit distributed among the shareholders or investors of…

Answered: You recently purchased a round lot (100…

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

See similar textbooks

Similar questions

You are considering the purchase of 50 shares of Roney Industries common stock. Roney's dividends are expected to increase at an annual rate of 3% for the next two years and then decrease by 4% for the next two years before stabilizing at a positive growth rate of 4.2% that will continue indefinitely. The day before your purchase, the firm paid a common stock dividend of $8 per share. Calculate the price of Roney's common stock as of today assuming that the market requires a rate of return of 10% on the common stock.
You purchased 100 shares of stock for a share price of $16.14. You sold the stock two years later for a share price of $18.22. You also received total dividend payments of $1.54 per share. What was your total return on your investment?
Your broker recommends that you purchase Good Mills at $34. The stock pays a $2.20 annual dividend, which (like its per share earnings) is expected to grow annually at 3 percent. If you want to earn 9 percent on your funds, is this stock a good buy?
You purchased a stock for $53.4 a share and resold it one year later. Your total return for the year was 10.62 percent and the dividend yield was 6.18 percent. At what price (in $) did you resell the stock? Answer to two decimals.
You purchased 1,000 shares of a mutual fund at an offer price of $13.88 per share. Several months later you sold the shares for $14.62 per share. During the time you owned the shares, the fund paid a dividend of $0.63 per share. What was your return on investment? Round to the nearest tenth %
If a security offers a dividend amounting to P 5.23/ share and an investor purchased 200 shares at P 77.50/share, what is his Total Investment Return at the end of the year if the share price increased by 8%? Based on the given above, compute for the Dividend Yield Rate, Capital Gains Rate, and Total Investment Return Rate.
Keidis Industries will pay a dividend of $4.15, $5.25, and $6.45 per share for each of the next three years, respectively. In four years, you believe that the company will be acquired for $59.00 per share. The return on similar stocks is 11.7 percent. What is the current stock price?
You are investing in a share of stock. The share just paid a dividend of $7.46. The dividend has been growing and is expected to grow forever at a rate of 5.26% per year. You require a 12.89% rate of return on the stock investment. What would be a fair price/share in 8 years? (Answer to nearest $0.01)
Suppose you bought 150 shares of stock at an initial price of $47 per share. The stock paid a dividend of $0.46 per share during the following year, and the share price at the end of the year was $50. Compute your total dollar return on this investment.
Eight months ago, you purchased 400 shares of AAA stock for $46.40 a Share. The company pays quarterly dividends of $1.05 a share. Today, you sold all of Your shares are for $48.30 a share. What is your total percentage return on this Investment? What is your total dollar return on this investment? Briefly discuss.
Micro’s irredeemable preference shares are selling for $82.50 each and pay $3.25 in dividends every six months. What is your effective annual expected rate of return if these securities are purchased at the market value?
An investor is evaluating the maximum amount they are willing to pay for a share of ABC Corporation stock. Using the Capital Asset Pricing Model they determined that their required rate of return is 9%. They estimate that the earnings per share for the next 25 years is $7.00, but only $5.00 after adjusting for inflation . Based on this information what is the maximum amount the investor should pay for one share?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS