a.
To show: The data in tabular form in new worksheet.
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
a.
Explanation of Solution
The date have been shown in ‘column A’ while price of stock has been represented in ‘column’ B. The tabular presentation of the given data has been shown below:
b.
To compute:
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
b.
Explanation of Solution
Rate of return for each year has been computed using the following formula:
Thus, the calculated rate of return has been shown below:
c.
To compute: Cumulative total return since 2011.
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
c.
Explanation of Solution
Cumulative rate of return can be computed by adding each year’s rate of return. It can be computed on excel using following formula:
Thus, the calculated cumulative rate of return has been shown below:
d.
To compute: Rate of return for holding period and compound average rate of return.
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
d.
Explanation of Solution
The rate of return for the holding period can be computed as:
The calculated answer has been shown below:
Now, compound annual average of return can be computed using:
e.
To prepare: Line chart and scattered chart. Also, state the difference between the two charts and suggest the most suitable.
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
e.
Explanation of Solution
The line chart has been prepared for FAST stock prices:
The scattered chart has been prepared for FAST stock prices:
Following are the differences between line and scatter chart:
Line chart: The values ??are plotted only on the y-axis i.e., the vertical axis. While, on the x-axis i.e., the horizontal axis the sequence number of the value is shown. Exceptions: graphs with the date on the X-axis.
Scatter chart: The relationship between two values is represented using the scatter chart. Scatter charts is often known as XY chart.
Here, two different values are not given which means there is no need to find the relationship between two values. So, in order to find trend of stock prices a line chart is more appropriate.
f.
To prepare: 3-D line chart and discuss if it helps in better understanding.
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
f.
Explanation of Solution
The line chart has been prepared for FAST stock prices:
The 3-D line chart has been prepared:
The comparison between the two charts can be seen easily. Thus, yes the enhancements will make data more attractive for the reader.
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Chapter 1 Solutions
EBK FINANCIAL ANALYSIS WITH MICROSOFT E
- You want to check if GRBH stock is fairly priced in the markets by using the fundamental analysis. For this purpose, you have gathered the following information: GRBH pays dividends once a year and the next dividend payment is expected to be made in one year. You project the EPS of the first and second year to be $5 and $7 respectively. The company dividend payout ratio is stable at 0.2. At the end of the second year, you assume that the company would become the average company in the industry. The industry average PE ratio is 8. You believe that the appropriate required rate of return on GRBH stock is 10% (CCR per annum). And the current market price of GRBH stock is $45 Find the alpha ( Expected abnormal rate of return, c ) assuming the mispriced figure would be corrected in a year.arrow_forwardExplain how a financial market operates? Which of the investment constraints is expected to have the most impact on your decision process? You plan to buy common stock and hold it for one year. You expect to receive both ₱150 and ₱260 from the sale of the stock at the end of the year. How much will you pay for the stock, if you want to a. Have a return of 8% b. A return of 20% c. A return of 15%arrow_forwardGo to finance.yahoo.com, search for the stock page for Merck (MRK). Find MRK's current trading price, Forward Dividend (Annual) in dollar, and its 1-year target estimate. Calculate the stock price if you required rate of return is 10% per year. This would be your intrinsic value (The fair price for Merck if the required rate of return is 10%). - Compare it to the current stock price from the website, would you buy the stock? - If you buy the stock today at the price you find on Yahoo, what would be your rate of return over the next year?arrow_forward
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- The annual rate of return on any given stock can be found as the stock's dividend for the year plus the change in the stock's price during the year, divided by its beginning-of-year price. If you obtain such data on a large portfolio of stocks, like those in the S&P 500, find the rate of return on each stock, and then average those returns, this would give you an idea of stock market returns for the year in question. true/falsearrow_forwardproblems should be solved by using a financial calculator or MS excel spreadsheet. Accordingly, you must show the values of all relevant time valu of money variables ABC stock selss for $60.25 per shar. Its required rate of return is 10.25%. The dividend is expected to grow at a constant rate of 7.00% per year. What is the expected year-end dividend, D1?arrow_forwardSuppose you bought a stock for $50 on January 1st. Six months later you received a dividend of $1.10 and you sold the stock for $53.30. Given this information, annualized return is ______________. answer is 17.6%arrow_forward
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