Question: Complete the example for calculating realized returns with cash from our meeting. Use both portfolio method and accounting method to verify that they produce the
Complete the example for calculating realized returns with cash from our meeting. Use both portfolio method and accounting method to verify that they produce the same results.
a) Suppose you bought 5,000 shares of ABC.
b) Suppose you bought 2,500 shares of ABC, and deposit rate is 5%.
c) Suppose you bought 10,000 shares of ABC and borrowed at 5%.
d) How would the method be affected if the borrowing rate was higher at 6%, but the deposit rate remains unchanged?
e) Suppose you have $100,000 and ABC is trading at $20/share. One-year later, ABC pays $2 in dividends and is worth $16/share.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
