Questions from General Investment

Q: Imagine that you want to create your own stock index to measure

Imagine that you want to create your own stock index to measure the performance of the stock market over time. You decide to use a methodology similar to that used to calculate the DJIA (see Equation...

Q: A little more than 10 months ago, Luke Weaver, a

A little more than 10 months ago, Luke Weaver, a mortgage banker in Phoenix, bought 300 shares of stock at $40 per share. Since then, the price of the stock has risen to $75 per share. It is now near...

Q: T. J. Patrick is a young, successful industrial designer

T. J. Patrick is a young, successful industrial designer in Portland, Oregon, who enjoys the excitement of commodities speculation. T. J. has been dabbling in commodities since he was a teenager—he wa...

Q: Jim Pernelli and his wife, Polly, live in Augusta,

Jim Pernelli and his wife, Polly, live in Augusta, Georgia. Like many young couples, the Pernellis are a two-income family. Jim and Polly are both college graduates and hold high paying jobs. Jim has...

Q: Kathleen “Penni” Kennedy is a young career woman who has

Kathleen “Penni” Kennedy is a young career woman who has built a substantial investment portfolio. Most of her holdings are preferred stocks—a situation she does not want to change. Penni is now consi...

Q: Hal and Terri Wilson had most of their funds invested in common

Hal and Terri Wilson had most of their funds invested in common stock in late 2019. The Wilsons didn’t really do very much investment planning, and they had practically no background...

Q: Gary Sofer wants to estimate the market value of the Wabash Oaks

Gary Sofer wants to estimate the market value of the Wabash Oaks Apartments, a 12-unit building with six one-bedroom units and six two-bedroom units. The present owner of Wabash Oaks provided Gary wit...

Q: Dr. Marilyn Davis, a single, 34-year-

Dr. Marilyn Davis, a single, 34-year-old heart specialist, is considering the purchase of a small office condo. She wants to add some diversity to her investment portfolio, which now contains only cor...

Q: In the beginning of this chapter you read about open interest on

In the beginning of this chapter you read about open interest on Amazon put options. Suppose in January 2018, put and call options were available on Amazon stock with the following terms: Option Strik...

Q: The regular dividend on PG&E preferred stock is $0

The regular dividend on PG&E preferred stock is $0.3125 per quarter, or $1.25 per year. In December 2017, just before the company suspended dividend payments, the preferred shares were trading at $26....