Assignment 1 - Jason Wilcox Assignement 1 Investing P1.3 A...

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Jason Wilcox Assignement 1 Investing P1.3 A. The Pangs can buy 1000 shares in the Utility Company. This is found by taking their $50,000 they have to invest and dividing that by the cost of share which is $50. $50,000/$50= 1000. B.The Pangs will receive $1700 a year after taxes from their investment in the Utility Company. This is found by: 1000 shares times $2 per share= $2000 multiplied by 15% which is $300. $2000-$300= $1700 per year after taxes. C. The total amount the Pangs will have from their investment after 10 years is $67,000. 1700 after taxes times 10 years plus the original 50,000= 67,000. D. The yearly amount the Pang’s would receive from the bond would be $1675. 50,000 x .5(5%) 2500 = 2500. 2500 x .33(33%, Pang’s tax bracket) = 825/ 2500-825=1675. E. The total amount the Pang’s would have after from their investment in bonds after 10 years would be $66,750. 1675(annual amount from interest) x 10 years= 16,750 + 50,000 original funds= 66,750. F. Based solely off of the calculations between the stocks and the bonds I would recommend that the Pang’s invest in the stock from the Utility Company because the total amount after ten years is $500 more. 2.7 Concepts in Review An investor can buy foreign securities directly through foreign exchanges, Yankee Bonds, and/or American depositary receipts (ADR). Investments into foreign securities can also be made indirectly by investing into mutual fund that invests in foreign securities. P2.13 A. The debit balance is $8250 which is found by the following: 300 shares x $55 per share= 16,500. Then 16,500 (1-.5) = 8250. The equity balance is $8250 which if found by taking 16,500 by the margin 50% = 8250 B. The following formula was used to compute the answers below Margin % = Value of Equity-Debit Balance Value of Equity 1. 38.99%- This account is restricted 2. 63.33%- This account has excess equity 3. 21.43%- This account is subject to a margin call.
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C. The dividend received are $450 by taking the dividends per share, $1.50 x 300 shares = 450. The interest paid on the margin during the 4-month period was $247.50. Which is found by taking the debit balance, 8250 x 9%(interest rate) and multiplying that by 4/12 because at this time only months have passed. D. The following three answers were all found by using the same formula but
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This note was uploaded on 12/18/2010 for the course BME 251123 taught by Professor Grimmer during the Spring '10 term at SUNY Albany.

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Assignment 1 - Jason Wilcox Assignement 1 Investing P1.3 A...

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