Suppose that in the IBM example above, the investor borrows only $5,000 at the 3.5 same interest
Question:
Suppose that in the IBM example above, the investor borrows only $5,000 at the 3.5 same interest rate of 9% per year. What will the rate of return be if the price of IBM goes up by 30%? If it goes down by 30%? If it remains unchanged?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 75% (4 reviews)
To calculate the rate of return in different scenarios for an investor who borrows 5000 ...View the full answer
Answered By
Bhartendu Goyal
Professional, Experienced, and Expert tutor who will provide speedy and to-the-point solutions. I have been teaching students for 5 years now in different subjects and it's truly been one of the most rewarding experiences of my life. I have also done one-to-one tutoring with 100+ students and help them achieve great subject knowledge. I have expertise in computer subjects like C++, C, Java, and Python programming and other computer Science related fields. Many of my student's parents message me that your lessons improved their children's grades and this is the best only thing you want as a tea...
3.00+
2+ Reviews
10+ Question Solved
Related Book For
Essentials Of Investments
ISBN: 9780073368719
7th Edition
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
Question Posted:
Students also viewed these Business questions
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Last Sale Net Bid Ask Open Int Puts Last Sale Net bid Ask Vol Open Int 16Aug 155.00(1619H155-E) 6.45 0.75 6.95 7.25 9 16Aug 155.00(1619T155-E) 1.18 (0.75) 1.17 1.25 61 4505 16Aug 166.00(1619H160-E)...
-
The unadjusted trial balance of Simple Consulting Services as at December 31, 2021 is as follows: Cash Accounts receivable Prepaid insurance Supplies inventory Office equipment Accumulated...
-
Comment on the following statements and situations: a. The best researchers are prepared to rethink and rewrite their proposals. b. The clients signature is an essential element of the research...
-
The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2018 and 2019 are presented below ($ in millions): Information Provided by Pension Plan Actuary:...
-
Continuing Question 5, turn off the lag filter and use a notch filter to improve the performance. Simultaneously adjust Notch Freq and KVP to maximize KVP without inducing peaking in the closed-loop...
-
Shelby Corporation purchases 90% of the outstanding stock of Borner Company on January 1, 2011, for $603,000 cash. At that time, Borner Company has the following stockholders equity balances: common...
-
Please read the following summary of a news article regarding Unmanned Aerial Systems (UAVs) and provide a thoughtful response and whether you agree or disagree. "For this edition of current events...
-
The Equity Fund sells Class A shares with a front-end load of 4% and Class B shares with 12b-1 fees of .5% annually as well as back-end load fees that start at 5% and fall by 1% for each full year...
-
What type of trading order might you give to your broker in each of the following circumstances? a. You want to buy shares of Intel to diversify your portfolio. You believe the share price is...
-
If one has interval or ratio data and the data set is multimodal, one should use ____ as the measure of central tendency.
-
Determining Merchandise to Be Included or Excluded from Ending Inventory The unadjusted inventory balance of Ultim Corp. is $ 1 8 0 , 0 0 0 on December 3 1 based on a physical inventory count. The...
-
A company plans to buy a machine costing $ 5 6 0 , 0 0 0 . It has a residual value of $ 2 3 , 7 0 0 and an expected useful life of five years. Compute the average investment.
-
Using the following information for ABC Manufacturing Company, prepare the income statement for the year ended December 3 1 , 2 0 2 3 . ( Assume a 3 0 % income tax. ) . . Finished Goods Inventory...
-
1 . Consider the case of Taiwan. Describe it on the basis of the seven dimensions. 2. Using this description, predict a general profile of financial accounting in Taiwan. 3. find a reference that...
-
Arbor, Incorporated had overhead of $ 3 3 5 , 0 0 0 during the year when $ 2 8 5 , 0 0 0 in labor costs were incurred. Estimates at the start of the year for overhead and labor costs were $ 3 9 8 , 7...
-
A random variable has the following density function. f(x) = 1 .5x 0 < x < 2 a. Graph the density function. b. Verify that f(x) is a density function. c. Find P(X > 1). d. Find P(X < .5). e. Find...
-
The baseball player A hits the ball from a height of 3.36 ft with an initial velocity of 34.8 ft/s. 0.14 seconds after the ball is hit, player B who is standing 15 ft away from home plate begins to...
-
Assume that stock market returns have the market index as a common factor, and that all stocks in the economy have a beta of 1 on the market index. Firm-specific returns all have a standard deviation...
-
The SML relationship states that the expected risk premium on a security in a one-factor model must be directly proportional to the securitys beta. Suppose that this were not the case. For example,...
-
Consider the following multifactor (APT) model of security returns for a particular stock. a. If T-bills currently offer a 6% yield, find the expected rate of return on this stock if the market views...
-
Athens Gas Station has figured out the weekly demand distribution for their gas sales. Each gallon of gas sold at the pump results in a profit of 10 cents/gallon and any lost sales results in a cost...
-
1. The maximum pressure an eardrum can withstand without rupturing is Pmax = 3.0102 Pa. Assume a sound is made at that pressure. If the density of air is, p=1.20 kg/m, and the speed of sound is 340...
-
52. A wave is sent down a string with a linear mass density of 1.600 x 10-4 kg/m. The wavefunction that describes this wave is: y(x,t) = (0.021 m)*sin{(2.00 rad/m)*x + (30.0 rad/s)*t} What is the...
Study smarter with the SolutionInn App