Investing in the Stock Market Assignment | Homework For You

1. Investing in the stock market: Johnson & Johnson (JNJ) is trading at 91.31. JNJ is a large health care conglomerate. It has done well over the last couple of years and you think it will continue to do well. After careful analysis you conclude that in one year the price will be (55, 65, 93, 120, 135) with associated probabilities of (0.1, 0.2, 0.4, 0.2, 0.1). Looking at the company’s past record you determine that JNJ will pay a dividend of 3.10 (two quarterly dividends of 0.75 and two quarterly dividends of 0.80). If you invest your funds risk-free in the money market you will receive 1%. a. What is the expected return of JNJ stock? What is the risk premium of JNJ stock?
b. Calculate the standard deviation of the return of JNJ stock (remember that you are using probabilities to do this, not historical data). You become convinced that this investment opportunity is a good one. In the current conditions JNJ seems like a safe investment. You decide to buy JNJ stock on margin. You purchase 200 shares, financing half with your own investment and borrowing half from your broker.
c. How much do you borrow from your broker? What is your initial margin? In one week bad news reaches the economy and the price of JNJ stock drops to 75 immediately.
d. What is the new margin on the account? Do you receive a margin call?
e. Calculate the return on your investment. What would the return have been if you had not borrowed any funds (Hint: what is the return on JNJ stock)?
f. Now assume that, in one year, the stock price is 120 and JNJ has paid a dividend. Your broker charged you an interest rate of 2% on the amount you borrowed. What is the return on your investment and what would the return have been if you had not borrowed? Get Finance homework help today

Don't use plagiarized sources. Get Your Assignment on
Investing in the Stock Market Assignment | Homework For You
Just from \$13/Page

Pages(550 words)

Approximate price:-

Quality Assignment Papers

We aim at 100% customer satisfaction. As such, we never compromise on the quality of our assignment services. Our homework helpers craft each paper carefully to match the requirements on the instruction form.

Professional Homework Helpers

We receive many applications from writers around the world daily. Nevertheless, we only choose the cream of the crop to tackle your “help with homework” requests. Hence, our homework helpers are highly-qualified individuals who maintain our quality policy.

Affordable Homework Help

We maintain a fair pricing policy for all our homework help services. Our pricing system generates quotations based on the requirements of each paper.

On-Time Assignment Delivery

At My Homework Writers, we guarantee all students swift delivery of their assignments. We understand that time is an essential factor in the academic world. We, therefore, ensure that all assignments are delivered on or before the agreed deadline.

100% Original Assignment Papers

We maintain a zero-plagiarism policy in all our essay papers. Our assignment writers stick to the students’ instructions to deliver plagiarism-free papers. We are also keen to avoid any chance of similarities with previously written papers.

We understand that you might run into trouble once in a while when working with our system. In the event that you do run into trouble, please get in touch with our support agents and they will immediately provide you with assistance.

Feel free to contact us via the Chat window or email: support@myhomeworkwriters.com.

How myhomeworkwriters works?

Fill in the order form and provide all details of your assignment.

2). Proceed with the payment

Choose the payment system that suits you most.

3). Track Progress

You will be able to track the progress of your paper from our system.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
\$0.00

Our Assignment Writing Services

Myhomeworkwriters website holds a reputation for providing high-quality assignment writing services. You only need to give us all the requirements for your “do my homework” order, and our homework paper writers will give you the best results.

Essay Writing Services

We have highly qualified essay writers to assist you whenever you place in "help with my homework" order. Our essay writing service is designed to help students get good grades.