Question

In: Finance

If the price for Apple stock is $44 today, and the dividend next period is $3.50...

If the price for Apple stock is $44 today, and the dividend next period is $3.50 and the price next period is expected to be $36, what is the capital gains yield?

A) 18.182%

B) - 18.182%

C) 7.954%

D) 22.22%

E) - 10.228%

Solutions

Expert Solution

Ans B) - 18.182%

Po = Purchase Price
P1 = Sale Price
CAPITAL GAIN YIELD = (P1 - P0)/ P0 * 100
(36 - 44) / 44 * 100
-18.182%

Related Solutions

Apple stock sells at $186.18 and is not expected to pay any dividend over the next...
Apple stock sells at $186.18 and is not expected to pay any dividend over the next six months. The 6-month $180-strike call is selling at $27.90. The risk-free rate is 3% per annum continuously compounded. Options considered here are assumed to be of European style. a) What is the theoretical price of the 6-month put? b) The 6-month put is selling at $17.80 in the market. How would you undertake this arbitrage opportunity? Show the cash flow table. c) How...
Consider a two-period binomial model in which a stock trades currently at $44. The stock price...
Consider a two-period binomial model in which a stock trades currently at $44. The stock price can go up 6% or down 6% each period. The risk free rate is 2% per period. A) Calculate the price of a call option expiring in two periods with an exercise price of $45. B) Calculate the price of a put option expiring in two periods with an exercise price of $45.
Consider a two-period binomial model in which a stock trades currently at $44. The stock price...
Consider a two-period binomial model in which a stock trades currently at $44. The stock price can go up 6% or down 6% each period. The risk free rate is 2% per period. A) Calculate the price of a call option expiring in two periods with an exercise price of $45. B) Calculate the price of a put option expiring in two periods with an exercise price of $45. C) Based on your answer in A), calculate the number of...
Find the price for a stock given that the next dividend is $2.38 per share, the...
Find the price for a stock given that the next dividend is $2.38 per share, the required return is 9.6%, and the growth rate in dividends is 1.3% per year.
A stock has a current value of $94 per share. The stock price next period will...
A stock has a current value of $94 per share. The stock price next period will be an increase of 15% or a decrease of 10% and the one period risk-free rate is 4%. What is the value of a one period call option on the stock with a strike price of $90? (2 points) What is the value of a one period put option on the stick with a strike price of $90? (2 points)
You purchase apple stock today at a price of $200. After a year it has declined...
You purchase apple stock today at a price of $200. After a year it has declined to $150 but paid a $20 dividend, what is the annual return on your purchase? -25% -15% 15% 25% 47%
The closing stock price of Apple yesterday is $106/share. On each of the next two days...
The closing stock price of Apple yesterday is $106/share. On each of the next two days (today and tomorrow), its price will either increase by 1% or decrease by 1%. The risk-free interest rate is 0.01% per day. Right after the closing of the NYSE yesterday, you decided to buy European call options written on Apple’s stock with exercise price of $106. The options will expire in two days (at the end of tomorrow). What should be the value of...
3. Stock Valuation A company’s stock just paid a dividend (D0) of $3.50 and the stock’s...
3. Stock Valuation A company’s stock just paid a dividend (D0) of $3.50 and the stock’s dividends are expected to grow at a constant rate of 4.0% per year. The stock has a beta of 1.2, the risk-free rate is 2%, and the market risk premium is 7%. a. Is this stock more or less risky than the market? Why? b. Use the CAPM to compute the cost of equity/required return for the stock (rs)? c. Use the constant-growth dividend...
Value and Returns A stock has an expected dividend yield of 3.8% a price today of...
Value and Returns A stock has an expected dividend yield of 3.8% a price today of $30 and an expected sale price in one year of $33. The stock has a beta of 1.2 and the expected return on the market is 10% while the risk free rate is 5%. This stock is _____________ by ________ basis points. overvalued; 143 undervalued; 280 undervalued; 143 overvalued; 280
today’s share price of Apple is $270. You think Apple’s stock will rise over the next...
today’s share price of Apple is $270. You think Apple’s stock will rise over the next 3 months. Today you observe the following option prices (all expiring in 3 months): Option 1: Call Option Premium = $9; with a Strike Price = $275 Option 2: Call Option Premium = $7; with a Strike Price = $280 1. Which of these options is in-the-money today? A) Both B) Neither C) Only Option 1 D) Only Option 2 4 2. Today you...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT