Please help! 1. An investor bought 100 shares of Venus Corporation common stock
ID: 2653082 • Letter: P
Question
Please help!
1. An investor bought 100 shares of Venus Corporation common stock 1 year ago for $40 per share. She just sold the shares for $44 each, and during the year, she received four quarterly dividend checks for $40 each. She expects the price of the Venus shares to fall to about $38 over the next year. Calculate the investor’s realized percentage holding period return.
1. An investor bought 10 Ellis Industries, Inc. long-term bonds 1 year ago, when they were first issued by the company. In addition, he bought 200 shares of the com- pany’s common stock at the same time for $30 per share.He paid $1,000 each for the bonds, and today, the bonds are selling at $950 each (long-term interest rates have increased slightly over the past year). The bonds have a stated interest rate of 12 percent per year. The investor received an interest payment equaling $60 per bond 6 months ago and has just received another $60 per bond interest payment. Calculate the investor’s percentageholdingperiodreturnforthe1yearhehasheld the bonds.
Explanation / Answer
note : It has been assumed that divident is received $2 per share as no rate is given in the question
2. Interest received in second case is $60 each bond on half yearly system , we can say that total interest received in a year = $60 + $60 = $120 each in a year
therefore , % holding return would be
1 no. of share rate amount cost of investment 100 40 4000 sale of share 100 44 4400 profit 400 add: dividend received 100 2 200 total gain 600 % holding return = total gain /cost of investment *100 600/4000 *100 15%