Week2
INVESTMENTS
Chapter 4
(a) Problem 1: Capital Gains = $4,700.00 / Taxes due for short term = $1,316.00
Stock
Bought
Sold
Gain or Loss
Short Term
(28%)
ABC
24,500
28,600
4,100
1,148.00
DEF
35,400
31,000
-4,400
-1232.00
GHI
31,000
36,000
5,000
1,400.00
Week 5
INVESTMENTS
Chapter 14
Problem 1: Principal $1,000; Rate 8%; Maturity 10 years
a) N=10; I=8; PMT = 80 = Present Value is Par $1,000.
b) N=10; I=10; PMT = 80; FV=1,000 = Below Par $877.11
c) 80/1000 Bond a = 8% current yield; 80/877.11 bond b = curr
HW 6
Chapter 17
1. The T-bill is purchased for $96,750 and will pay $100,000 when retired.
The discount yield is
($3,250/$100,000)360/180 = 6.5%.
The annual yield is
($3,250/$96,750)(365/180) = 6.81%.
The compounded yield is
.5
$96,750( 1 + i) = $100,000
HW 4
Chapter 13
#3. Debt/Equity: $700,000/$300,000 = 2.3
Debt ratio (Debt/Total assets):
$700,000/($700,000 + $300,000) = 0.7 = 70%
4. The firm wants to achieve the industry average given its level of sales. Thus:
Industry average = Sales/Average inventor
Chapter 9: problems: 2, 4, 7
Chapter 10: problems 4, 11, 13, 17
CHAPTER 9 PROBLEMS
9-2.
An investor requires a return of 12 percent on risky securities. A stock
sells for $25, it pays a dividend of $1, and the dividends compound
annually at 7 percent. Wil
Chapter 4: problems 1, 2, 4, 7
Chapter 5: problems 2, 3, 5, 6
CHAPTER 4 PROBLEMS
4.1
a) An individual in the 28 percent federal income tax bracket and 15 percent
long-term capital gains tax bracket bought and sold the following securities
during the year:
Chapter 8: Problems: 2, 3, 5, 6, 8.
CHAPTER 8 PROBLEMS
8-2.
A firm has the following items on its balance sheet:
Cash
Inventory
$ 20,000,000
134,000,000
Notes payable to bank
Common stock ($10 par; 1,000,000 shares outstanding)
31,500,000
10,000,000
Retai
Chapter 14: Problems 1, 3, 5, 9, 15, 20, 25
CHAPTER 14 PROBLEMS
14-1. A $1,000 has a coupon rate of 8 percent and matures after ten years.
$1,000
b) What is the price of the bond if the rate of interest is 10 percent?
$875
c) What are the current yields g
Chapter 15: Problems 1, 3, 6, 10;
Chapter 16: problems 3, 4, 7
CHAPTER 15 PROBLEMS
15-1. If a six-month Treasury bill is purchased for $0.9675 on a dollar (i.e., $96,750 for
a $100,000 bill), what is the discount yield, the annual rate of interest, the
co
Week 7
INVESTMENTS
Chapter 17
Problem 2: Call option $4; strike price $25; current market cost $26
a) Market value strike price = $25 26 = $1.00 intrinsic value; Time premium = cost intrinsic
value or $4.00 - $1.00 = $3.00 time premium
b) If market price
Week 3
INVESTMENTS
Chapter 9
Problem 2:
Required return 12%; sells for $25.00 dividend $1.00 compound at 7%
V = $1.00(1+.07)/.12-.07 = 1.07/.05 = $21.40 Value of Stock, No, do not buy at $25.00
$1.00(1.07)/25.00 +.07 = Return of 11.2% less than the 12% th
Week I
INVESTMENTS
Chapter 2:
Problem 1:
Sold @ $1,750.00 - Buy @ $1000.00 = Gain of $750.00
(a) 25% Margin req. of $1,000 = $250.00: 750.00 250.00 = 3 or 300% gain
(b) 50% Margin req. of $1,000 = $500: 750.00 500.00 = 1.5 or 200% gain
(b) 70% Margin req.