f17as1.doc - Assignment 1 1 Screening Stocks Go to...

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Assignment 1 1. Screening Stocks : Go to http://www.superstockscreener.com or any other screener and Select top 10 stocks traded on NYSE with Min P/E=20 and Max P/E =50. 2. Go to finance.yahoo.com and look up the ticker symbols for the following companies: Citigroup, Alimentation Couche Tard, Corus Entertainment, Kingsway Financial. 3. Supppose you buy a round lot of Horse Inc. stock on 55% margin when it is selling at $40 a share. The broker charges a 10 percent annual interest rate and commissions are 4 percent of the total stock value on both the purchase and the sale. If at year end you receive a $0.90 per share dividend and sell the stock for 35 5/8 , what is your rate of return on the investment? 4. Hedi Talbott has a margin account with a balance of $50,000. If initial margin requirements are 40 percent, and Redcat Industries is currently selling at $50 per share. a. How many shares of Redcat can Heidi buy? b. If the maintenance margin is 25 percent, to what price can Redcat Industries fall before Heidi receives a margin call? 5. End-of-month closing prices for 2 non-dividend-paying companies are presented below. Month Security A Security B 1 67 6/8 52 2 70 2/8 56 5/8 3 69 3/8 54 2/8 4 68 4/8 55 4/8 5 66 2/8 56 7/8 6 65 57 Compute the risk-return for each stock using 68% interval. 6. Two securities, L and M , are perfectly negatively correlated. L's standard deviation is .6 and M's standard deviation is .8. Find the portfolio of L and M that will result in the lowest possible risk level. 7 .You have $10,000 invested, 30% of which is invested in Company X, which has an expected rate of return of 15%, and 70% of which is invested in Company Y, with an expected return of 9%.
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