Question
In: Finance
A manager buys three shares of stock today, and then sells one of those shares each...
A manager buys three shares of stock today, and then sells one of those shares each year for the next 3 years. His actions and the price history of the stock are summarized below. The stock pays no dividends.
| Time | Price | Action | |||||||||
| 0 | $ | 120 | Buy 3 shares | ||||||||
| 1 | 150 | Sell 1 share | |||||||||
| 2 | 150 | Sell 1 share | |||||||||
| 3 | 150 | Sell 1 share | |||||||||
a. Calculate the time-weighted geometric average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. Calculate the time-weighted arithmetic average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. Calculate the dollar-weighted average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Solutions
jeff jeffy answered 6 months agoRelated Solutions
A manager buys three shares of stock today, and then sells one of those shares each...
A manager buys three shares of stock today, and then sells one
of those shares each year for the next 3 years. His actions and the
price history of the stock are summarized below. The stock pays no
dividends.
Time
Price
Action
0
$
140
Buy 3 shares
1
150
Sell 1 share
2
150
Sell 1 share
3
150
Sell 1 share
a. Calculate the time-weighted geometric
average return on this portfolio. (Do not
round intermediate calculations. Round your...
A manager buys three shares of stock today, and then sells one of those shares each...
A manager buys three shares of stock today, and then sells one
of those shares each year for the next 3 years. His actions and the
price history of the stock are summarized below. The stock pays no
dividends.
Time
Price
Action
0
$
125
Buy 3 shares
1
145
Sell 1 share
2
145
Sell 1 share
3
145
Sell 1 share
a. Calculate the time-weighted geometric
average return on this portfolio. (Do not
round intermediate calculations. Round your...
Investor buys 200 shares of stock at $27.25 per share. Investor sells the stock after one...
Investor buys 200 shares of stock at $27.25 per share. Investor
sells the stock after one year. 1. What is the dollar amount of
gain and the percent of return if the stock is sold for $32.60 per
share? How much does the yield percentage increase to if the stock
received a per share dividend of $1.15 during the year? 2. What is
the dollar amount of loss and percentage of return if the stock
received a per share dividend...
Joe sells his shares in BHP and buys shares in a tech stock company. Are these...
Joe sells his shares in BHP and buys shares in a tech stock
company. Are these primary or secondary market transactions?
Explain why.
In what way is the existence of well-developed secondary
markets important to the functioning of the primary markets within
the financial
system? (Marks
2 + 2 =4)
Distinguish between a coupon security and a discount security.
Give an example of
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2)
Riley and Bailey are planning to start a new business together.
They are expecting annual taxable...
4. Bernice buys shares of stock in ABC Corporation for $400,000. She sells the stock to...
4. Bernice buys shares of stock in ABC Corporation for $400,000.
She sells the stock to her daughter, Henrietta, for $300,000. How
much loss did Bernice realize on the sale? How much loss did
Bernice recognize? Henrietta sells the stock two years after
receiving it. What are Henrietta’s realized and recognized
gains/losses if Henrietta sells the stock for $100,000, $250,000 or
$600,000? If you were going to submit an argument to Congress to
change these rules, what would your best...
Que : Mary buys and sells ladies' handbags. She buys for cash and sells on one...
Que : Mary buys and sells ladies' handbags. She buys for cash
and sells on one month's credit. She pays £20 for each bag and
sells them for £35 each. During March, her first month of trading,
she bought 50 handbags for cash and had 10 handbags remaining in
inventory at the month end. Ignoring any other expenses or
payments, which of the following statements is true for
March?
Select one:
a. The business made a gross profit for the...
A trader opens the following position: Buys the stock Buys two Jan 25 puts Sells three Jan 30 calls
S
K
Calls
Puts
NOV
DEC
JAN
NOV
DEC
JAN
25
20
-
-
7.30
.10
-
.55
25
22.50
3.20
3.40
-
.90
-
1.25
25
25
1.50
-
4.00
1.40
1.95
2.10
25
27.50
.60
.88
-
3.50
-
4.00
25
30
.16
.55
.90
5.10
5.40
5.50
A trader opens the following position:
Buys the stock
Buys two Jan 25 puts
Sells three Jan 30 calls
Based upon this information, what would the breakeven prices
be?
An investor buys 100 shares of a stock, shorts 60 call options on the stock with...
An investor buys 100 shares of a stock, shorts 60 call options
on the stock with strike price of $20 and buys 60 put options on
the stock with strike price of $10. All options are one-year
European options. Draw a diagram illustrating the value of the
investor’s portfolio as a function of the stock price after one
year.
An investor buys 100 shares of a stock, shorts 50 call options on the stock with...
An investor buys 100 shares of a stock, shorts 50 call options
on the stock with strike price of $80 and buys 50 put options on
the stock with strike price of $40. All options are one-year
European options. Draw a diagram illustrating the value of the
investor’s portfolio as a function of the stock price after one
year.
A share of stock sells for $50 today. The beta of the stock is .8, and...
A share of stock sells for $50 today. The beta of the stock is
.8, and the expected return on the market is 18 percent. The stock
is expected to pay a dividend of $.90 in one year. If the risk-free
rate is 4.9 percent, what should the share price be in one year?
(Do not round intermediate calculations. Round your answer
to 2 decimal places.)
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