• STOCK A: Desired margin of safety: $25\%$ Value after thorough analysis: $$150$ Selling price on stock market exchange: $$120$

• STOCK B: Desired margin of safety: $25\%$ Value after thorough analysis: $$200$ Selling price on stock market exchange: $$145$

• QUESTIONS:

  $1.$ What is the amount $($in $$)$ of discount we desire for Stock A$?$ 

  $2.$ What is the amount $($in $$)$ of discount we desire for Stock B$?$ 

  $3.$ After applying the discount in #$1$ to Stock A$,$ what maximum price would you be willing to pay for Stock A$?$ 

  $4.$ After applying the discount in #$2$ to Stock B$,$ what maximum price would you be willing to pay for Stock B$?$ 

  $5.$ Which stock should you purchase? Why?

Answer rating: 100% (QA)

To solve this problem we need to use the concept of margin of safety Given information Stock A Desir... View the full answer