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Apple currently trades at $438. 1.Ignoring the time value of money, what is your total profit...

Apple currently trades at $438.

1.Ignoring the time value of money, what is your total profit with a stock price of $426?

2.What is your total profit if you consider the time value of money? The risk-free rate is 0.01 (EAR).

Solutions

Expert Solution

1)Profit = current price- stock price

              = 438 - 426

              =$ 12

2)stock price if time value of money is considered = stock price(1+risk free rate)

                                                                            = 426(1+.01)

                                                                            = 430.26

Profit = 438-430.26

          = $ 7.74

jeff jeffy answered 1 year ago
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