Question

3) Suppose you buy 100 shares of Scotia Bank at $85 per share, and 80 shares of CIBC at $75 per share. If Scotia Bank’s stock goes up to $88.50 per share and CIBC's stock goes up to $77 per share, what is your portfolio return?

A) 2%

B) 0%

C) 3.5%

D) 3%

E) 4.5%

Answer #1

Scotia Bank

Number of shares = 100

Purchase Cost per share = $85

Total Purchase Cost = 100*85 = $8500

CIBC

Number of shares = 80

Purchase Cost per share = $75

Total Purchase Cost = 80*75 = $6000

Total Portfolio Value = 8500 + 6000 = $14500

New Price of Scotia = $88.50

Value of Scotia = 100*88.50 = $8850

New Price of CIBC = $77

Value of CIBC = 80*77 = $6160

New Portfolio Value = 8850 + 6160 = $15010

Portfoli Return = (New Value - Purchase Cost)/Purchase Cost *100

= (15010 - 14500)/14500 *100 = 3.5%

A portfolio has 80 shares of Stock A that sell for $42 per share
and 100 shares of Stock B that sell for $26 per share.
Required:
(a)
What is the portfolio weight of
Stock A?
(b)
What is the portfolio weight of
Stock B?

Assume you want to buy 100 shares of stock at $50 per share
because you feel it will rise to $60 within 3 months. The stock
pays $4 per share in annual dividends. You are going to buy the
stock with 70% margin and will pay 8.0% interest on the margin
loan.
Calculate the return if the price go up to $55 in 3 months.

Suppose you buy 100 shares of stock XYZ at $10 a share with a
margin of 50%. You also buy 200 shares of stock ABC at $50 a share
with an 60% margin. You are very sure that, in six month, the price
of the first stock would be $15 because you got insider
information, but you are not so sure about the price of the second
stock. Suppose you want to achieve a 20% return from your
portfolio, then...

Suppose you buy 100 shares of stock XYZ at $10 a share with a
margin of 50%. You also buy 200 shares of stock ABC at $50 a share
with an 60% margin. You are very sure that,
in six month, the price
of the first stock would be $15 because you got insider
information, but you are not so sure about the price of the second
stock. Suppose you want to achieve a 20% return from your
portfolio, then...

Suppose you buy 100 shares of stock XYZ at $10 a share with a
margin of 50%. You also buy 200 shares of stock ABC at $50 a share
with an 60% margin. You are very sure that,
in six month, the price
of the first stock would be $15 because you got insider
information, but you are not so sure about the price of the second
stock. Suppose you want to achieve a 20% return from your
portfolio, then...

portfolio has 100
shares of shares of Stock A that sell for $20 per share and 120
shares of stock B that sell for $30 per share. If the expected
returns on Stock A and B are 5% and 10%, respectively, what is the
expected return on the
portfolio?
Multiple Choice
1.8%
8.2%
6.8%
35.7%

A portfolio has 100
shares of shares of Stock A that sell for $20 per share and 120
shares of stock B that sell for $30 per share. If the expected
returns on Stock A and B are 5% and 10%, respectively, what is the
expected return on the
portfolio?
Multiple Choice
1.8%
8.2%
6.8%
35.7%

1. You bought 200 shares of Dr Pepper Snapple Group at $70.67
per share, 100 shares of Home Depot at $111.72 per share, and 50
shares of Tesla Motors at $235.11 per share one year ago. Suppose
that the financial data from the same period indicate that Dr
Pepper Snapple Group, Inc. stock has a beta of -0.11, Home Depot,
Inc. stock has a beta of 1.21, and Tesla Motors, Inc. stock has a
beta of 1.4. The risk-free interest...

Suppose that you buy 450 shares of stock at an initial price of
$50 per share. The stock pays a dividend of $0.52 per share during
the following year, and the share price at the end of the year is
$52. Calculate the following:
The capital gains yield for the year
The dividend yield
The total rate of return on the investment for the holding
period
The total dollar return for the year
(5 points) Assume that the return of...

eBook
Problem 3-03
Suppose you buy a round lot of Francesca Industries stock (100
shares) on 60 percent margin when the stock is selling at $20 a
share. The broker charges a 13 percent annual interest rate, and
commissions are 3 percent of the stock value on the purchase and
sale. A year later you receive a $0.60 per share dividend and sell
the stock for $32 a share. What is your rate of return on Francesca
Industries? Do not...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 3 minutes ago

asked 3 minutes ago

asked 4 minutes ago

asked 6 minutes ago

asked 6 minutes ago

asked 7 minutes ago

asked 8 minutes ago

asked 9 minutes ago

asked 10 minutes ago

asked 11 minutes ago

asked 12 minutes ago