Question: exercise 3 ) 1) consider a stock with an asking price at $67 and a bidding price of $27. What is the total cost of

exercise 3 )

1) consider a stock with an asking price at $67 and a bidding price of $27.

What is the total cost of a round trip transaction involving 1.352 shares?

ANSWER TO 0 DECIMAL PLACES

2) Today is Time 0, consider the following 3-period company. - At time 1, the company generates 83,029.083 cash flows. - from time 1 to time 2, the growth rate of cash flows is 0.456 - from time 2 to time 3, the growth rate of cash flows is 0.180

The company discounts cash flows at the rate of 0.718

Suppose you purchase this company today. What is the holding rate of return between time 0 and time 2?

ANSWER TO 3 DECIMAL PLACES

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