Question

FinCorp Inc. purchased a stock for $50. It expects to hold the stock for two years, receive a dividend of $1.50 at the end of each year, and sell the stock immediately after receiving the second dividend. Assume dividends are held in a zero interest savings account.
a. If the sale price is $75, what is the expected annual return?
b. If the sale price is $35, what is the expected annual return?
c. If the actual return was −4 percent, what was the sale price?
d. If the actual return was 15 percent, what was the sale price?



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  • CreatedFebruary 25, 2015
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