Which alternative offers the best return on the investment

Assignment Help Financial Management
Reference no: EM131623602

Calculating return on investment Which of the following would offer the best return on investment? Assume that you buy $8,000 in stock in all three cases, and ignore interest and transaction costs in all your calculations.

A) Buy a stock at $70 without margin and sell it 1 year later at $100.

B) Buy a stock at $60 with 50% margin and sell it 1 year later at $75.

C) Buy a stock at $70 with 75% margin and sell it 1 year later at $75.

Which Alternative offers the best return on the investment.

Reference no: EM131623602

Questions Cloud

Calculating profits on margined and unmargined investments : Contrast these figures to what she'd make if she uses no margin. Calculate the return on investment. Calculate the dollar net profit.
Consider to replace their general partnership : Which form of business entity should they consider to replace their general partnership assuming they wish to remain the only two owners of their business?
When interest rates change than does the shorter-term bond : Why does the longer-term (15 years) bond fluctuate more when interest rates change than does the shorter-term bond (1) years?
What is business process management : What is business process management (BPM)? Why do processes need management?
Which alternative offers the best return on the investment : Calculating return on investment Which of the following would offer the best return on investment? Which Alternative offers the best return on the investment.
How might prosecutors see the computer involvement : Because of these computer activities, when she is ultimately arrested and charged, how might prosecutors see the computer involvement?
Discuss the ethics of information security professionals : The cybersecurity organization ISC(2) sets forth a useful model within which to discuss the ethics of information security professionals.
What is the nal for wildcat : What is the NAL for Wildcat? What is the maximum lease payment that would be acceptable to the company?
Determining roe to yield projected pb : Determining ROE to Yield Projected PB. What must Google earn (ROE) on average over the next 5 years to make it a worthwhile investment?

Reviews

Write a Review

Financial Management Questions & Answers

  Discussing each of the option pricing models

Please write a paragraph discussing each of the option pricing models and discussing the benefits and limitations of each model. Conclude with an explanation of which model represents the preferred model and/or whether each model should be used for s..

  What is the formula for the expected return of portfolio

What is the formula for Expected Return of a Single Stock? What is the formula for the Expected Return of a Portfolio?

  What was cys dollar profit or loss and holding period return

Cy bought a share of stock for $47.50 that paid a dividend of $.72 and sold one year later for $51.38. What was Cy's dollar profit or loss and holding period return?

  Compute present value of bankruptcy costs for slash and burn

Compute the present value of bankruptcy costs for Slash and Burn. - Recalculate the value of the company, assuming that the firm's shareholders face a 25 percent personal tax rate on equity income.

  Returns to compute an approximate var

The following information for the last 120 days of returns to compute an approximate VaR for a $20 million portfolio using a probability of 0.05.

  Uses var risk management techniques

Gwynedd Bank plc. uses VaR risk management techniques. One of the bank’s traders has a £20 million portfolio of equities. The portfolio’s return is normally distributed with a one-day standard deviation of 0.5%. What is the loss in value that has a 1..

  Maximum price in light of the dividend payment logistics

What will be the expected maximum price in light of the dividend payment logistics?

  Debating the manageability of firms culture

It's been often said, "The more manageable a firm's culture is, the less valuable it will be for the firm." Post your supported agreement or rebuttal. Your initial discussion board post should be at least 200-250 words in length and should use at lea..

  Calculating option values-what is the value of call option

Suppose the current price of the company's stock is $89. What is the value of the call option if the exercise price is $84 per share?

  Dividends are expected to grow at a constant rate

The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. Investors require a return of 11 percent on the company's stock. What ..

  Perform a complete ratio analysis of a firm

What is the difference between the firm's operating cycle and its cash conversion cycle?Which would be more important to you as an owner and why?

  Calculate the equivalent uniform annual worth of the machine

A machine costs $73,000 initially and will have a salvage value of $10,000 after 9 years. It will also have an operating cost of $21,000 in year 1, with 5% continuing increases each year thereafter to year 9. The MARR is 19% per year. Compute the Equ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd