S Suppose you have $30,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $50 per share. You also notice that a call option with a $50 strike price and six months to maturity is available. The premium is $4. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $56 per share? What about $46 per share?- Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. $56 per share $46 per share Annualized Return Option Stock % % %

S Suppose you have $30,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $50 per share. You also notice that a call option with a $50 strike price and six months to maturity is available. The premium is $4. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $56 per share? What about $46 per share?- Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. $56 per share $46 per share Annualized Return Option Stock % % %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Suppose you have $48,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $80 per share. You also notice that a call option with a $80 strike price and six months to maturity is available. The premium is $4. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $88 per share? What about $76 per share?- Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. $88 per share $76 per share X Answer is not complete. Annualized Return Option Stock 21.00 % -9.75 % % %
Suppose you have $42,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $60 per share. You also notice that a call option with a $60 strike price and six months to maturity is available. The premium is $3. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $67 per share? What about $56 per share?
Suppose you have $55,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $110 per share. You also notice that a call option with a $110 strike price and six months to maturity is available. The premium is $5.5. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $118 per share? What about $106 per share?- Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. $118 per share $106 per share Stock 15.07 Annualized Return Option % 0.00% 111.57 % 0.00%
2. Suppose you purchase 500 shares of stock at $48 per share with an initial cash investment of $8,000. If your broker requires a 30% maintenance margin, at what share price will you be subject to a margin call? Suppose the call money rate is 5% and you are charged with a 1.5% premium over this rate. Calculate your return on investment if the share price is $56 per share in 5 months. What is the effective annual return rate if you sell the shares at $56 per share in 5 months?
Suppose you have $21,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $70 per share. You also notice that a call option with a $70 strike price and six months to maturity is available. The premium is $3.5. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $77 per share? What about $66 per share?- Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. > Answer is complete but not entirely correct. Annualized Return Option $77 per share $66 per share Stock 21.00 % -11.09 % 300.00 % -100.00 %
Suppose you have $28,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $40 per share. You notice that a put option with a $40 strike is available with a premium of $2.80. Calculate your percentage return on the put option for the six-month holding period if the stock price declines to $36 per share. (Do not round intermediate calculations. Enter your 6-month return as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Percentage return %
One of the options is Delta Airlines. They have paid an annual divendend of $3.98 for the past 25 years and we expect them to continue this indefinetly. Assuming the market requires a(n) 12.0% return Delta, what is the value of a share of stock? (Answer with 2 decimals.) And what if we assumed they would start increasing their divendend by 2.5% per year? What would be a fair price in that scenario? (Answer with 2 decimals.)
You are considering the purchase of Ahlecs Company stock. You anticipate that the company will pay dividend of P2.25 per share next year and P2.50 per share the followiing year. You believe that you can sell the stock for P18.50 per share two years from now. If your required rate of return is 12.5%, what is the maximum price that would pay for a share?
Suppose you sell short 300 shares of stock initially selling for $40 a share. Your initial margin requirement is 50% of the value of the stock sold. The stock pays $2 dividend per share at year-end. How much do you need to contribute to your margin account (in dollars) at t=0? What will be your rate of return at the end of the year holding period if the price is $30 per share? If the maintenance margin is 30%, at what stock price you will receive a margin call?
You purchase 500 shares of Compucon for $120 per share using a margin account. This transaction requires a 45% percent margin. a. What is the initial margin position? b. Assume the price of Compucon declines to $90 per share. If the minimum maintenance margin requirement is 25% will you receive a margin call? Why? Why not? Explain. c. What is your rate of return? d. Calculate the price that will trigger a margin call.
You are considering whether to purchase a company's stock. The stock is expected to pay two dividends, $1.50 at the end of year 1 and $1.75 at the end of year 2. The expected selling price of the stock is $17.50 at the end of year 2. If you require a rate of return of 16% per year for the investment, what is the maximum price that you are willing to pay per share? Select one: a. $14.61 b. $15.49 C. $14.51 d. $15.60 e. $14.17
You are bullish on XYZ stock. The current market price is $100 per share, and you have $10,000 of your own to invest. You borrow an additional $10,000 from your broker at an interest rate of 8% per year and invest $20,000 in the stock. WHAT IS THE margin call if the maintenance margin is 30%? Assume the price IS $115 one year LATER.

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