Questions from General Investment

Q: A Brazilian company called Netshoes completed its IPO on April 12,

A Brazilian company called Netshoes completed its IPO on April 12, 2017, and listed on the NYSE. Netshoes sold 8,250,000 shares of stock to primary market investors at an IPO offer price of $18. Secon...

Q: Jeff Krause purchased 1,000 shares of a speculative stock on

Jeff Krause purchased 1,000 shares of a speculative stock on January 2 for $2.00 per share. Six months later on July 1, he sold them for $9.50 per share. He uses an online broker that charges him $10...

Q: Jill Clark invested $25,000 in the bonds of Industrial

Jill Clark invested $25,000 in the bonds of Industrial Aromatics, Inc. She held them for 13 months, at the end of which she sold them for $26,746. During the period of ownership she received $2,000 in...

Q: Charlotte Smidt bought 2,000 shares of the balanced no-

Charlotte Smidt bought 2,000 shares of the balanced no-load LaJolla Fund exactly one year and two days ago for an NAV of $8.60 per share. During the year, the fund distributed investment income divide...

Q: Linda Babeu, who is in a 33% ordinary tax bracket

Linda Babeu, who is in a 33% ordinary tax bracket (federal and state combined) and pays a 15% capital gains rate on dividends and capital gains for holding periods longer than 12 months, purchased 10...

Q: Mom and Pop had a portfolio of long-term bonds that

Mom and Pop had a portfolio of long-term bonds that they purchased many years ago. The bonds pay 12% interest annually, and the face value is $100,000. If Mom and Pop are in the 25% tax bracket, what...

Q: On January 1, 2020, Simon Love’s portfolio of 15 common

On January 1, 2020, Simon Love’s portfolio of 15 common stocks had a market value of $264,000. At the end of May 2020, Simon sold one of the stocks, which had a beginning-of-year value of $26,300, for...

Q: Apple stock is selling for $120 per share. Call options

Apple stock is selling for $120 per share. Call options with a $117 exercise price are priced at $12. What is the intrinsic value of the option, and what is the time value?

Q: You believe that oil prices will be rising more than expected and

You believe that oil prices will be rising more than expected and that rising prices will result in lower earnings for industrial companies that use a lot of petroleum-related products in their operat...

Q: Refer to Problem 14.10. What happens if you are

Refer to Problem 14.10. What happens if you are wrong and the price of QLT increases to $25 on the expiration date? Data from Problem 14.10: You believe that oil prices will be rising more than expec...