FIN550 WEEK 2 HOMEWORK
Chapter 4: Problems 4, 5, 6, and 7
4. You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly
high of $56. Your broker tells you that your margin requirement is 45 percent and that the
commission on the purchase is $155. While you are short the stock, Charlotte pays a $2.50
per share dividend. At the end of one year, you buy 100 shares of Charlotte at $45 to close
out your position and are charged a commission of $145 and 8 percent interest on the
money borrowed. What is your rate of return on the investment?
120 Part 1: The Investment Background
Property of Cengage Learning
5. You own 200 shares of Shamrock Enterprises that you bought at $25 a share. The stock is
now selling for $45 a share.
a. You put in a stop loss order at $40. Discuss your reasoning for this action.
b. If the stock eventually declines in price to $30 a share, what would be your rate of return
with and without the stop loss order?
6. Two years ago, you bought 300 shares of Kayleigh Milk Co. for $30 a share with a margin
of 60 percent. Currently, the Kayleigh stock is selling for $45 a share. Assuming no dividends
and ignoring commissions, compute (a) the annualized rate of return on this investment
if you had paid cash, and (b) your rate of return with the margin purchase.
7. The stock of the Madison Travel Co. is selling for $28 a share. You put in a limit buy order
at $24 for one month. During the month the stock price declines to $20, then jumps
to $36. Ignoring commissions, what would have been your rate of return on this investment?
What would be your rate of return if you had put in a market order? What if
your limit order was at $18?
•Chapter 6: Problems 1, 2, 3, and 4
1. Compute the abnormal rates of return for the following stocks during period t (ignore differential
systematic risk): Stock Rit Rmt
B 11.5% 4.0%
F 10.0 8.5
T 14.0 9.6
C 12.0 15.3
E 15.9 12.4
Rit = return for stock i during period t
Rmt = return for the aggregate market during period t
2. Compute the abnormal rates of return for the five stocks in Problem 1 assuming the following
systematic risk measures (betas):
Stock βi
B 0.95
F 1.25
T 1.45
C 0.70
E −0.30
3. Compare the abnormal returns in Problems 1 and 2 and discuss the reason for the difference
in each case.
Chapter 6: Efficient Capital Markets 179
4. Look up the daily trading volume for the following stocks during a recent five-day period:
• Merck
• Caterpillar
• Intel
• McDonald’s
• General Electric
Randomly select five stocks from the NYSE, and examine their daily trading volume for
the same five days.
a. What are the average volumes for the two samples?
b. Would you expect this difference to have an impact on the efficiency of the markets for
the two samples? Why or why not?
fin 550 week 2 homework 0
/in Uncategorized /by JosephFIN550 WEEK 2 HOMEWORK
Chapter 4: Problems 4, 5, 6, and 7
4. You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly
high of $56. Your broker tells you that your margin requirement is 45 percent and that the
commission on the purchase is $155. While you are short the stock, Charlotte pays a $2.50
per share dividend. At the end of one year, you buy 100 shares of Charlotte at $45 to close
out your position and are charged a commission of $145 and 8 percent interest on the
money borrowed. What is your rate of return on the investment?
120 Part 1: The Investment Background
Property of Cengage Learning
5. You own 200 shares of Shamrock Enterprises that you bought at $25 a share. The stock is
now selling for $45 a share.
a. You put in a stop loss order at $40. Discuss your reasoning for this action.
b. If the stock eventually declines in price to $30 a share, what would be your rate of return
with and without the stop loss order?
6. Two years ago, you bought 300 shares of Kayleigh Milk Co. for $30 a share with a margin
of 60 percent. Currently, the Kayleigh stock is selling for $45 a share. Assuming no dividends
and ignoring commissions, compute (a) the annualized rate of return on this investment
if you had paid cash, and (b) your rate of return with the margin purchase.
7. The stock of the Madison Travel Co. is selling for $28 a share. You put in a limit buy order
at $24 for one month. During the month the stock price declines to $20, then jumps
to $36. Ignoring commissions, what would have been your rate of return on this investment?
What would be your rate of return if you had put in a market order? What if
your limit order was at $18?
•Chapter 6: Problems 1, 2, 3, and 4
1. Compute the abnormal rates of return for the following stocks during period t (ignore differential
systematic risk): Stock Rit Rmt
B 11.5% 4.0%
F 10.0 8.5
T 14.0 9.6
C 12.0 15.3
E 15.9 12.4
Rit = return for stock i during period t
Rmt = return for the aggregate market during period t
2. Compute the abnormal rates of return for the five stocks in Problem 1 assuming the following
systematic risk measures (betas):
Stock βi
B 0.95
F 1.25
T 1.45
C 0.70
E −0.30
3. Compare the abnormal returns in Problems 1 and 2 and discuss the reason for the difference
in each case.
Chapter 6: Efficient Capital Markets 179
4. Look up the daily trading volume for the following stocks during a recent five-day period:
• Merck
• Caterpillar
• Intel
• McDonald’s
• General Electric
Randomly select five stocks from the NYSE, and examine their daily trading volume for
the same five days.
a. What are the average volumes for the two samples?
b. Would you expect this difference to have an impact on the efficiency of the markets for
the two samples? Why or why not?
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research about kohlbergs moral
/in Uncategorized /by JosephThere is a Shared File about Kohlberg’s Moral Stages. Complete a short paper, APA style on Kohlberg’s Moral Stages. It may be a critique of his theory, an explanation of his theory, or you may relate his theory to society today. As an alternative, I would allow the submission of a biography of Kohlberg. The paper should be 5-7 pages long (3-5 pages of content, with a title page and references page). Use at least two references, one of which may be your textbook. Remember to use intext citations as well. The paper should be double spaced. It will be graded in three areas: content, following of APA guidelines, and grammar and spelling.
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final project xacc 280 1750 2050 word about 3 pages double spaced paper which you
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/in Uncategorized /by JosephCreate a cover letter and resume for a (real or fictitious) job opportunity. You may use the cover letter and templates available in Word. When writing the cover letter, be sure to reference the resume.
Merge the two into a single document so that the cover letter is followed by the resume.
Create another document that you might use in a portfolio to showcase your skills in the following:
Remember, these are documents that are used to reflect your professional capacity. Only correct spelling and grammar are acceptable.
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philosophywestern
/in Uncategorized /by Josephi just need correct answers
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bcom 275 demonstrative communication paper 1974322 2
/in Uncategorized /by JosephMUST BE ORIGINAL WORK AND CITED PROPERLY. NO REUSED WORK!!
Write a 700–word paper describing demonstrative communication. Demonstrative communication includes nonverbal and unwritten communication and involves such things as facial expressions, tone of voice, body language, and so forth. Include the following elements in your paper:
Format your paper consistent with APA guidelines.
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unit 8 seminar 0
/in Uncategorized /by JosephThe chapter discusses a variety of genres in film. In Seminar, you will discuss these genres, as well as the purpose of film and its techniques.
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distance still matters hard reality global expansion
/in Uncategorized /by JosephReading 1-2 is intended to underscore the motivations, means, and mentalities required to expand abroad.
Read Distance Still Matters: The Hard Reality of Global Expansion beginning on page 80.
Choose one of the following countries: Brazil, India, Russia, Indonesia, or Turkey
Based on the chapter reading and the material provided in the article, provide a short background of the country. Share 5 vital Do’s and 5 vital Don’ts that a business traveler can rely on when they enter the country of you have chosen. You may use information for the internet to answer this question also.
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describe briefly purposes government set out preamble constitution
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discussion online post assignment please advice
/in Uncategorized /by JosephAssignment 1: Leading and Managing Interrelated Business Functions
Ahmed Kasadi has just been told the company’s senior human resources officer would like to speak with him on a conference call. Ahmed is the Afghanistan in-country manager for a large US based corporation, and recently reported his concerns about company employees bribing government officials to get a $500 million dollar contract. Ahmed has been with the company for 10 years and knows how seriously the company takes its ethics policy. More importantly, Ahmed’s family was born in this region and he had developed a local reputation for supporting economic development. The company had engaged in bribery activities in the past that resulted in millions of dollars in fines from the US government. When he took over his current job, he had every employee in the country retrained on the ethics policy, and held monthly status updates on ethics activities. Now, with this new issue, Ahmed was sure the HR officer wanted to talk with him about being a model for integrity.
To his surprise, Ahmed is told by the HR officer that he had signed an agreement to handle all disputes internally, and he should not discuss this issue with anyone outside the company. Ahmed believed that the current bribery activity was not only against the law, and contradicted the ethics policy, but if the contract was awarded and the bribery was later revealed, the company would face serious financial and goodwill losses.
Several weeks go by as Ahmed mulls this situation over. He then contacts his manager to express his concerns. His boss considers that the kinds of activities Ahmed is concerned about fall into a gray area. In this part of the world, “commissions”, and “consulting fees” are just a normal part of doing business. He tells Ahmed to drop the issue and concentrate more on meeting his business objectives. Ahmed, continues to raise concerns, and eventually receives a bad performance review. Several months pass and the company is awarded the contract. Shortly thereafter, Ahmed sues the company under a provision of the law known as the Foreign Corrupt Practices Act, and is subsequently fired by his boss.
Consider Ahmed’s predicament and his actions. In your 200–300-word response, address the following:
Submit your results to the Discussion Area by Saturday, December 3, 2016. Review and respond to the work of at least two other students by Tuesday, December 6, 2016.
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