FIN_355_Ch56910_Homework_and_Solutions[1]

FIN_355_Ch56910_Homework_and_Solutions[1] - FIN 355...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
FIN 355 Homework Chapter 5 (P177-178): Questions and Problems 1, 2, 4–7, 14–17 Chapter 6 (P217-218): Questions and Problems 1–15, 17–20 Chapter 9 (P334-335): Questions and Problems 1, 4, 7, 8, 12, 13 Chapter 10 (P369-370): Questions and Problems 2, 4, 6, 8, 11, 13, 14, 22–24
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 5 The Stock Market 1. d = (93 + 312/2 + 78) / [(93 + 312 + 78) / 3] = 2.03106 2. d = (93 + 312/3 + 78) / [(93 + 312 + 78) / 3] = 1.70807 4. Beginning index value = (37 + 84)/2 = 60.50 Ending index value = (41 + 93)/2 = 67.00 Return = (67.00 – 60.50)/60.50 = 10.74% 5. Beginning value = [($37 × 35,000) + ($84 × 26,000)] / 2 = $1,739,500 Ending value = [($41 × 35,000) + ($93 × 26,000)] / 2 = $1,926,500 Return = ($1,926,500 – 1,739,500) / $1,739,500 = 10.75% Note you could also solve the problem as: Beginning value = ($37 × 35,000) + ($84 × 26,000) = $3,479,000 Ending value = ($41 × 35,000) + ($93 × 26,000) = $3,853,000 Return = ($3,853,000 – 3,479,000) / $3,479,000 = 10.75% The interpretation in this case is the percentage increase in the market value of the market. Note, the value weighted and price weighted index provided approximately the same answers. This is a special case, as the answers will often be much different. 6. Beginning of year: $1,739,500 / $1,739,500 × 100 = 100.00 End of year: $1,926,500 / $1,739,500 × 100 = 110.75 Note you would receive the same answer with either initial valuation method: Beginning of year: $3,479,000 / $3,479,000 × 100 = 100.00 End of year: $3,853,000 / $3,479,000 × 100 = 110.75 7. 408.16(1 + .1075) = 452.04 or x / 408.16 = 110.75 / 100, So x = 452.04 14. a. 1/1/10: Index value = (103 + 45 + 74)/3 = 74.00 b. 1/1/11: Index value = (106 + 39 + 63)/3 = 69.33 2010 return = (69.33 – 74.00)/74.00 = –6.31% 1/1/12: Index value = (118 + 53 + 79)/3 = 83.33 1
Background image of page 2
2 2011 return = (83.33 – 69.33)/69.33 = 20.19% 15. Share price after the stock split is $35.33. Index value on 1/1/11 without the split is 69.33 (see above).
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/13/2011 for the course FIN 355 taught by Professor Phsiao during the Spring '08 term at S.F. State.

Page1 / 9

FIN_355_Ch56910_Homework_and_Solutions[1] - FIN 355...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online