Question

The Investor purchased the shares from five joint-stock companies (one from each company) instead of buying...

The Investor purchased the shares from five joint-stock companies (one from each company) instead of buying five shares of one joint-stock company. How will the degree of risk change if joint-stock companies are approximately equal in their characteristics? Explain your answer

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company (the investor) purchased 40,000 shares of common stock of the investee for $40 per...
A company (the investor) purchased 40,000 shares of common stock of the investee for $40 per share on January 2, 2020. The investee had 100,000 shares of common stock outstanding during 2021, paid cash dividends of $62,000 during 2021, and reported net income of $330,000 for 2021. The investor company should report revenue from investment for 2021 in the amount of....
An investor purchased 400 shares of a company at $30 per share. The stock was bought...
An investor purchased 400 shares of a company at $30 per share. The stock was bought on 65 percent margin (35 percent of the purchase amount was borrowed). One month later, the investor had to pay interest on the amount borrowed at a rate of 3 percent per month. At that time, the investor received a dividend of $0.50 per share. Immediately after receiving the dividend, he sold the shares at $35 per share. The investor paid total commissions of...
An investor purchased 400 shares of a company at $30 per share. The stock was bought...
An investor purchased 400 shares of a company at $30 per share. The stock was bought on 65 percent margin (35 percent of the purchase amount was borrowed). One month later, the investor had to pay interest on the amount borrowed at a rate of 3 percent per month. At that time, the investor received a dividend of $0.50 per share. Immediately after receiving the dividend, he sold the shares at $35 per share. The investor paid total commissions of...
An investor purchased 300 shares of a company at $25 per share. The stock was bought...
An investor purchased 300 shares of a company at $25 per share. The stock was bought on 70 percent margin (30 percent of the purchase amount was borrowed). One month later, the investor had to pay interest on the amount borrowed at a rate of 3 percent per month. At that time, the investor received a dividend of $0.6 per share. Immediately after receiving the dividend, he sold the shares at $38 per share. The investor paid total commissions of...
Investment companies attempt to explain to investors the nature of the risk the investor incurs when...
Investment companies attempt to explain to investors the nature of the risk the investor incurs when buying shares in their mutual funds. For example, go to https://personal.vanguard.com/us/funds/ vanguard/all?sort=name&sortorder=asc. a. Select the bond fund you would recommend to an investor who has a very low tolerance for risk.Justify your answer. b. Select the bond fund you would recommend to an investor who has a higher tolerance for risk and a long investment horizon. Justify your answer.
One year ago, a U.S. investor converted dollars to yen and purchased 100 shares of stock...
One year ago, a U.S. investor converted dollars to yen and purchased 100 shares of stock in a Japanese company at a price of 3,150 yen per share. The stock's total purchase cost was 315,000 yen. At the time of purchase, in the currency market 1 yen equaled $0.00962. Today, the stock is selling at a price of 3,465 yen per share, and in the currency market $1 equals 95 yen. The stock does not pay a dividend. If the...
Each month a brokerage house studies various companies and rates each company’s stock as being either...
Each month a brokerage house studies various companies and rates each company’s stock as being either “low risk” or “moderate to high risk.” In a recent report, the brokerage house summarized its findings about 16 aerospace companies and 18 food retailers in the following table: Company Type Low Risk Moderate to High Risk Aerospace company 9 7 Food retailer 5 13    If we randomly select one of the total of 34 companies (a) Find the probability that the company's...
An investor company owns 30% of the common stock of an investee company. The investor has...
An investor company owns 30% of the common stock of an investee company. The investor has significant influence over the investee, and acquired its equity interest in the investee on January 1, 2018 for $525,000. On the date of acquisition, the investee’s stockholders equity was $1,500,000, and the fair values of the investee’s individual net assets were equal to their reported book values. During the year ended December 31, 2018, the investee reported net income of $50,000 and dividends of...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and a 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 6%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and a 11% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 7%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to...