Questions from General Investment

Q: You purchase a stock for $100 that pays an annual dividend

You purchase a stock for $100 that pays an annual dividend of $5.50. At the beginning of the second year, you purchase an additional share for $130. At the end of the second year, you sell both shares...

Q: You purchase a stock for $40 and sell it for $

You purchase a stock for $40 and sell it for $50 after holding it for five years. During this period you collected an annual dividend of $2. Did you earn more than 12 percent on your investment? What...

Q: A call penalty protects whom from what? Why may firms choose

A call penalty protects whom from what? Why may firms choose to retire debt prior to maturity? Would you expect a callable bond to have a higher or lower coupon rate of interest than a non-callable bo...

Q: You purchase shares in an investment company such as a mutual fund

You purchase shares in an investment company such as a mutual fund for $35 a share. The fund makes the following cash payments (“distributions”): At the end of the...

Q: You invest $100 in a mutual fund that grows 10 percent

You invest $100 in a mutual fund that grows 10 percent annually for four years. Then the fund experiences an exceptionally bad year and declines by 60 percent. After the bad year, the fund resumes its...

Q: You sold a stock short for $50 and maintained the position

You sold a stock short for $50 and maintained the position for two years during which the stock paid an annual dividend of $2. At the end of two years, you closed your position when the stock was sell...

Q: You read that stock A is trading for $50 and is

You read that stock A is trading for $50 and is down 50 percent for the year. Stock B is also trading for $50 but has risen 100 percent for the year. If the investor had purchased one share of each st...

Q: You believe that QED stock may be a good investment and decide

You believe that QED stock may be a good investment and decide to buy 100 shares at $40. You subsequently buy an additional $4,000 worth of the stock every time the stock’s price declines by an additi...

Q: a) A closed-end investment company is currently selling for

a) A closed-end investment company is currently selling for $10 and its net asset value is $10.63. You decide to purchase 100 shares. During the year, the company distributes $0.75 in dividends. At en...

Q: You purchase a REIT for $50. It distributes $3

You purchase a REIT for $50. It distributes $3 consisting of $1 in income, $0.50 in long-term capital gains, $0.30 in short-term capital gains, and $1.20 in return of capital. After a year, you sell t...