# Taxable Yield, Bonds, Rate of Return, Share Price, and other topics in finance

See the attached file.

Problem 4-24

You purchased 2,500 shares of the New Fund at a price of $20 per share at the beginning of the year. You paid a front-end load of 4%. The securities in which the fund invests increase in value by 11% during the year. The fund's expense ratio is 2.7%. What is your rate of return on the fund if you sell your shares at the end of the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Rate of return %

Problem 4-16

Corporate Fund started the year with a net asset value of $12.90. By year-end, its NAV equaled $12.30. The fund paid year-end distributions of income and capital gains of $1.40.

What was the rate of return to an investor in the fund? (Round your answer to 2 decimal places.)

Rate of return %

Problem 3-24

On January 1, you sold short one round lot (that is, 100 shares) of Lowe's stock at $24.70 per share. On March 1, a dividend of $1.50 per share was paid. On April 1, you covered the short sale by buying the stock at a price of $20.50 per share. You paid 20 cents per share in commissions for each transaction.

a. What is the proceeds from the short sale (net of commission)?

Proceeds from the short sale $2470.00

b. What is the dividend payment?

Dividend payment $150.00

c. What is the total cost, including commission, if you have to cover the short sale by buying the stock at a price of $20.50 per share?

Total cost including commission $

d. What is the value of your account on April 1?

Value of account $

100 24.7 2470

100 1.5 150

100 20.5 2050 2070

150 2070 -1920

Problem 3-15

Dée Trader opens a brokerage account and purchases 100 shares of Internet Dreams at $60 per share. She borrows $2,000 from her broker to help pay for the purchase. The interest rate on the loan is 10%.

a. What is the margin in Dée's account when she first purchases the stock?

Margin $

b-1. If the share price falls to $50 per share by the end of the year, what is the remaining margin in her account? (Round your answer to 2 decimal places.)

Remaining margin %

b-2. If the maintenance margin requirement is 30%, will she receive a margin call? yes

c. What is the rate of return on her investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

Rate of return %

Problem 3-19

You are bearish on Telecom and decide to sell short 100 shares at the current market price of $38 per share.

a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position?

Initial margin $1900.00

b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position? (Round your answer to 2 decimal places.)

Stock price reaches $

Problem 3-16

Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $130 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $130 to $144.00, and the stock has paid a dividend of $22.00 per share.

a. What is the remaining margin in the account?

Remaining margin $

b-1. What is the margin on the short position? (Round your answer to 2 decimal places.)

Short margin %

b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call?

c. What is the rate of return on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

Rate of return %

Problem 2-23

A T-bill with face value $10,000 and 97 days to maturity is selling at a bank discount ask yield of 4.4%.

a. What is the price of the bill? (Use 360 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price of the bill $

b. What is its bond equivalent yield? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Bond equivalent yield %

Problem 2-13

A municipal bond carries a coupon rate of 7.50% and is trading at par.

What would be the equivalent taxable yield of this bond to a taxpayer in a 35% tax bracket? (Round your answer to 2 decimal places.)

Equivalent taxable yield %

Problem 4-18

Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.60%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and an expense ratio of 0.40%. Assume the rate of return on both funds' portfolios (before any fees) is 6% per year.

a. How much will an investment of $100 in each fund grow to after 1 year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Loaded-Up Fund $

Economy Fund $

b. How much will an investment of $100 in each fund grow to after 3 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Loaded-Up Fund $

Economy Fund $

c. How much will an investment of $100 in each fund grow to after 10 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Loaded-Up Fund $

Economy Fund $

Problem 3-18

You are bullish on Telecom stock. The current market price is $70 per share, and you have $21,000 of your own to invest. You borrow an additional $21,000 from your broker at an interest rate of 8.8% per year and invest $42,000 in the stock.

a. What will be your rate of return if the price of Telecom stock goes up by 10% during the next year? (Ignore the expected dividend.) (Round your answer to 2 decimal places).

Rate of return %

b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately. (Round your answer to 2 decimal places.)

Stock price falls below $.

https://brainmass.com/math/fractions-and-percentages/taxable-yield-bonds-rate-of-return-and-share-price-532353

#### Solution Summary

The solution determines the taxable yield, bonds, rate and return and share price.

Financial Math

Address Following:

- Why are ratios useful? What three groups use ratios, and for what reasons?

- What qualitative factors should analysts look for when evaluating a company's likely future financial performance? Explain.

- You are training a new financial analyst who lacks experience. What are the most critical steps of financial analysis? Why are these steps critical and what will you hope to find?

Please be advised that there are also three file attachments below included with this posting containing finance problems.

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