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A year ago, you purchased 400 shares of a mutual fund at a NAV of $41.90. During the year, the fund paid dividends of $2.10 per share and had a capital gains distribution of $0.60 per share. The fund currently has a NAV of $44.40. Show work for all parts of this question.
a. Find your holding period return, assuming the dividends and capital gains are paid to you rather than reinvested. Express your answers as a percent rounded to two decimal places.
b. If instead you are going to reinvest dividends and capital gains, what dollar amount is reinvested in total? If reinvestment occurs at an average price of $43.20, how many additional shares will you obtain?
c. Find your holding period return, assuming the dividends and capital gains were reinvested as indicated in the previous part. Express your answers as a percent rounded to two decimal places.
An unlevered firm has a value of $900 million. An otherwise identical but levered firm has $50 million in debt at a 5% interest rate. Its cost of debt is 5% and its unlevered cost of equity is 12%. After Year 1, free cash flows and tax savings are ex..
A bond has a $1,000 par value, 10 years to maturity, and a 8% annual coupon and sells for $980. What is its yield to maturity (YTM)? Assume that the yield to maturity remains constant for the next 4 years. What will the price be 4 years from today?
Holdup Bank has an issue of preferred stock with a $5.35 stated dividend that just sold for $90 per share. What is the bank’s cost of preferred stock?
You must estimate the intrinsic value of Noe Technologies stock. The end-of-year free cash flow (FCF1) is expected to be $24.00 million, and it is expected to grow at a constant rate of 7.0% a year thereafter. The company’s WACC is 10.0%, it has $125..
A bond is a common investment opportunity. Suppose you have the opportunity to buy a bond with a par value of $1,000 and semi-annual coupon payments of $40 that matures in 10 years. Supposing this bond is available for $960, what is the payback perio..
Bond J is a 3% coupon bond. Bond K is 9% coupon bond. Both have 15 years to maturity, make semi-annual payments, and have a YTM of 6%. If the interest rate suddenly rises by 2%, what is the percentage price change of these bonds? What is rate suddenl..
A company estimates its cost of vendor financing (using its vendor as its banker) is 12.2%. It also estimates its effective cost of bank financing to be 9.1%. Which statement best describes this situation?
Option to Wait Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $475,000 per year. The cost of the machine will decline by $210,000 per year until it reaches $2,270,000, where it will remain. If ..
Assume that you just won the state lottery. Your prize can be taken in the form of $40,000 at the end of each of the next 25 years or as a single amount of $500,000 paid immediately. If you expect to earn 7% annually on your investments over the next..
The economy is slowing down, not growing and unemployment is going up. If you are on the Federal Reserve Board of Governors what type of policy would you pursue? Please be specific on the tools of monetary policy.
The following question has two parts and pertains to the yield curve. Suppose on February 6, 2007, the following information is available from the Treasury spot curve: What are three ways the yield curve changes or moves? How are these three changes ..
Prepare report on providing a clear audit trail to your company. Prepare a portfolio of analytical reference materials including the financial reports for at least five years. This is your analytical permanent file for the chosen company.
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