ECON 1330 Chapter 11 HW

Kathryn saw that the stock from her favorite company last sold for​ $37 per share. She purchased​ it, but was surprised to find out that the​ _______ was​ $39 per​ share, which means the stock cost her​ $2 more per share than she expected.

Ask price

Krista was looking at stocks to purchase when she is nearing retirement. She chose​ _______ because she wanted the fixed dividends and did not care about voting rights

Preferred stock owners receive a fixed​ dividend, but do not have voting rights like common stockholders do.

Gilbert was holding a​ ___________ bond. His adviser called and told him that he should exchange it for 90 shares of stock from the issuing company instead and explained that he had that right because of the type of bond that it was.

convertible

Cecil has invested ​$500 into his investment account each of the last three months. In the first​ month, he bought shares at $40 per share. In the second​ month, he bought shares for $50 per share. In the third​ month, he bought shares for ​$42 per share. The investment is currently selling for ​$52 per share. What is the current value of his​ account? (Cecil can purchase partial shares in his investment​ acc

$1,788.80

Marlene is purchasing a 25​-year, $1,000​-face-value bond as an investment. The bond is currently selling for $1,466 and it pays $110 interest annually. What is the yield to maturity for this​ bond?

Answer: 7.00% To calculate the yield to maturity​ (YTM), use time value of money​ calculations: ​N: 25 ​(years until​ maturity) ​PMT: ​$110 ​(annual interest or coupon​ payment) ​PV: ​-$1,466 ​(the cost of the​ bond, as a negative​ number) ​FV: ​$1,000 ​(the face​ value) ​Rate: Solve​ = 7.00​%

Cornelius was looking to purchase stock. The company he was researching had just reported $8,000,000 in earnings and was currently trading for $27 per share. There are 10,000,000 shares outstanding. What is the​ company's PE​ ratio?

First, calculate EPS which is Earnings divided by Shares outstanding ($8,000,000/ 10,000,000) ​= $0.80 ​EPS). Then, calculate the PE​ ratio, which is the Current price divided by EPS ($27 /0.80) ​= Answer: 33.75 (PE​ ratio).

Rashaun wants to invest some of his money. He is willing to take some risk because he wants to earn a decent return. He is most likely​ a(n) __________ investor.

Moderate

Kendra uses an online brokerage that charges ​$5 per trade. She bought 25 shares of a stock that was trading for $40 per share and later sold those same 25 shares for $42 per share. How much money did she make​ (or lose)?

She made $40