3. Buffett purchased Berkshire Hathaway stock at $13 a share in 1965. By 2005, BRK stock...

3. Buffett purchased Berkshire Hathaway stock at $13 a share in 1965. By 2005, BRK stock was trading at $140,000 a share. What is the geometric return for Buffett’s investment in 40 years?

Expert Solution

r = [Value in 2005 / Value in 1965]^1/n - 1

= [$140,000 / $13]^1/40 - 1

= [10,769.23]^0.025 - 1

= 1.2613 - 1 = 0.2613, or 26.13%

jeff jeffy answered 2 years ago

A stock advisor claims that Berkshire Hathaway, the investment co. run by Warren Buffett, generates ‘positive...

A stock advisor claims that Berkshire Hathaway, the investment co. run by Warren Buffett, generates ‘positive alpha.’ How can we test this using a regression model? What are we looking for in the regression output? Write out the regression and state what we are looking for.

Warren Buffett, the billionaire investor and chairman/CEO of Berkshire Hathaway, stated that "diversification is protection against...

Warren Buffett, the billionaire investor and chairman/CEO of Berkshire Hathaway, stated that "diversification is protection against ignorance”. Do you agree with his statement? Why or Why not?

Berkshire Hathaway's 13-F filing for the third quarter of 2010 reported that Warren Buffett had reduced...

Berkshire Hathaway's 13-F filing for the third quarter of 2010 reported that Warren Buffett had reduced his stake in Nike, Inc. by $224 million, bringing his holding to 7.62 percent of the 480 million outstanding shares. Nike reported a core return on net operating assets (core RNOA) of 32.7 percent in its annual report for the year ended May, 2010. A summary of it balance sheet at fiscal year end follows: Net operating assets $5,318 million Net financial assets 4,436...

On July 28th 2019, Berkshire Hathaway bought 750,000 shares of Brooks Running Shoes stock for $40...

On July 28th 2019, Berkshire Hathaway bought 750,000 shares of Brooks Running Shoes stock for $40 per share. Brooks’ Net Income for the year was $1.3 million. Berkshire received dividend payments of $150,000 each on September 30th, and December 31st. At December 31st (year-end) the stock was worth $42 per share. a. Prepare all appropriate journal entries for this investment for 2019 including any adjusting entries at year-end. b. Indicate amounts that Precision will show on its 2019 Income Statement,...

A corporation originally issued $7 par value common stock for $13 per share. It purchased the...

A corporation originally issued $7 par value common stock for $13 per share. It purchased the stock for $17 per share. Which of the following is included in the entry to record the sale of 20 shares of treasury stock for $18 per share? A Paid-In Capital from Treasury Stock Transactions is credited for $360. B Treasury Stock - Common is credited $340. C Treasury Stock - Common is credited $360. D Paid-In Capital from Treasury Stock Transactions is debited...

On January 1, 2005 Able Company purchased all of the stock of Baker Company. On January...

On January 1, 2005 Able Company purchased all of the stock of Baker Company. On January 1, 2010, Able purchased a piece of equipment for $50,000. This equipment is expected to last 8 years with a 2000 salvage. On January 1, 2011 Able sold the equipment to Baker for $50,000. Baker believes the asset has 7 years of life remaining and a $1,000 salvage. On January 1, 2013 Baker sold the equipment to Cat Company for $30,000. REQUIRED: A) PREPARE...

1) On January 1, 2005 Able Company purchased all of the stock of Baker Company. On...

1) On January 1, 2005 Able Company purchased all of the stock of Baker Company. On January 1, 2010, Able purchased a piece of equipment for $50,000. This equipment is expected to last 8 years with a 2000 salvage. On January 1, 2011 Able sold the equipment to Baker for $50,000. Baker believes the asset has 7 years of life remaining and a $1,000 salvage. On January 1, 2013 Baker sold the equipment to Cat Company for $30,000. Make all...

You purchased 1,000 shares of stock at $42 a share. The stock is currently selling for...

You purchased 1,000 shares of stock at $42 a share. The stock is currently selling for $45 a share. The initial margin was 70 percent and the maintenance margin is 30 percent. What is your current margin position?

An investor holds one share of Tesla stock. The investor purchased the stock at $125. The...

An investor holds one share of Tesla stock. The investor purchased the stock at $125. The current price is now $136. If the investor also purchased an option at the time he bought the share, at a premium of $1, with a strike price of $125, what would the investor prefer to be holding right now? (Please Explain Answer). call option put option either call or put, they have the same profit $0

You purchased a stock for $42.60 a share and sold it one year later for $44.30 a share.

You purchased a stock for $42.60 a share and sold it one year later for $44.30 a share. You received a total of $2.10 in dividends. What was your dividend yield on this investment? A.4.74 percent B.4.77 percent C.4.84 percent D.4.89 percent E.4.93 percent

Question