Questions from General Investment

Q: Assume that an investor buys 100 shares of stock at $50

Assume that an investor buys 100 shares of stock at $50 per share, putting up a 60% margin. a. What is the debit balance in this transaction? b. How much equity capital must the investor provide to ma...

Q: Assume that an investor buys 100 shares of stock at $50

Assume that an investor buys 100 shares of stock at $50 per share, putting up a 60% margin. If the stock rises to $60 per share, what is the investor’s new margin position?

Q: The risk-free rate is 3%, and expected inflation is

The risk-free rate is 3%, and expected inflation is 1.5%. If inflation expectations change such that future expected inflation rises to 2.5%, what will the new risk-free rate be?

Q: Calculate a one-year holding period return for the following two

Calculate a one-year holding period return for the following two investment alternatives. Which investment would you prefer, assuming they are of equal risk? Explain.

Q: Use a financial calculator or an Excel spreadsheet to estimate the IRR

Use a financial calculator or an Excel spreadsheet to estimate the IRR each of the following investments.

Q: An investor short sells 100 shares of a stock for $20

An investor short sells 100 shares of a stock for $20 per share. The initial margin is 50%. How much equity will be required in the account to complete this transaction?

Q: An investor short sells 100 shares of a stock for $20

An investor short sells 100 shares of a stock for $20 per share. The initial margin is 50%. Ignoring transaction costs, how much will be in the investor’s account after this transaction if this is the...

Q: Sara Holliday must earn a return of 10% on an investment

Sara Holliday must earn a return of 10% on an investment that requires an initial outlay of $2,500 and promises to return $6,000 in eight years. a. Use present value techniques to estimate the IRR on...

Q: You purchased a car using some cash and borrowing $15,

You purchased a car using some cash and borrowing $15,000 (the present value) for 50 months at 12% per year. Calculate the monthly payment (annuity).

Q: In the beginning of this chapter you read about Neil Dana,

In the beginning of this chapter you read about Neil Dana, who exercised his option to buy six million shares. In that transaction, Mr. Dana spent $3.6 million to acquire stock valued at $229 million....