Fin 310
Problem solutions to ch 8
LG3 8-1 Stock Index Performance On October 9, 2007, the Dow Jones Industrial Average set a new high. The index closed at 14,164.53, which was up 120.80 that day. What was the return (in percent) of the stock market that day?
FV = PV × (1 + i)
14,164.53 = (14,164.53 - 120.80) × (1 + i) i = (14,164.53 / 14,043.73) - 1 = 0.86%
LG3 8-2 Stock Index Performance On March 9, 2009, the Dow Jones Industrial Average reached a new low. The index closed at 6,547.05, which was down 79.89 that day. What was the return (in percent) of the stock market that day?
FV = PV × (1 + i)
6,547.05 = (6,547.05 + 79.89) × (1 + i) i = (6,547.05 / 6,626.94) - 1 = -1.21%
LG4 8-3 Buying Stock with Commissions At your discount brokerage firm, it costs $8.95 per stock trade. How much money do you need to buy 200 shares of Pfizer, Inc. (PFE), which trades at $27.22?
($27.22/share × 200 shares) + $8.95 = $5,452.95
LG4 8-4 Buying Stock with Commissions At your discount brokerage firm, it costs $9.50 per stock trade. How much money do you need to buy 300 shares of Time Warner, Inc. (TWX), which trades at $22.62?
($22.62/share × 300 shares) + $9.50 = $6,795.50
LG4 8-5 Selling Stock with Commissions At your full-service brokerage firm, it costs $120 per stock trade. How much money do you receive after selling 150 shares of Nokia Corporation (NOK), which trades at $20.13?
($20.13/share × 150 shares) - $120 = $2,899.50
LG4 8-6 Selling Stock with Commissions At your full-service brokerage firm, it costs $135 per stock trade. How much money do you receive after selling 250 shares of International Business Machines (IBM), which trades at $96.17?
($96.17/share × 250 shares) - $135 = $23,907.50
LG4 8-7 Buying Stock with a Market Order You would like to buy shares of Sirius Satellite Radio (SIRI). The current ask and bid quotes are $3.96 and $3.93, respectively. You place a market buy-order for 500 shares that
LG3 8-1 Stock Index Performance On October 9, 2007, the Dow Jones Industrial Average set a new high. The index closed at 14,164.53, which was up 120.80 that day. What was the return (in percent) of the stock market that day?
FV = PV × (1 + i)
14,164.53 = (14,164.53 - 120.80) × (1 + i) i = (14,164.53 / 14,043.73) - 1 = 0.86%
LG3 8-2 Stock Index Performance On March 9, 2009, the Dow Jones Industrial Average reached a new low. The index closed at 6,547.05, which was down 79.89 that day. What was the return (in percent) of the stock market that day?
FV = PV × (1 + i)
6,547.05 = (6,547.05 + 79.89) × (1 + i) i = (6,547.05 / 6,626.94) - 1 = -1.21%
LG4 8-3 Buying Stock with Commissions At your discount brokerage firm, it costs $8.95 per stock trade. How much money do you need to buy 200 shares of Pfizer, Inc. (PFE), which trades at $27.22?
($27.22/share × 200 shares) + $8.95 = $5,452.95
LG4 8-4 Buying Stock with Commissions At your discount brokerage firm, it costs $9.50 per stock trade. How much money do you need to buy 300 shares of Time Warner, Inc. (TWX), which trades at $22.62?
($22.62/share × 300 shares) + $9.50 = $6,795.50
LG4 8-5 Selling Stock with Commissions At your full-service brokerage firm, it costs $120 per stock trade. How much money do you receive after selling 150 shares of Nokia Corporation (NOK), which trades at $20.13?
($20.13/share × 150 shares) - $120 = $2,899.50
LG4 8-6 Selling Stock with Commissions At your full-service brokerage firm, it costs $135 per stock trade. How much money do you receive after selling 250 shares of International Business Machines (IBM), which trades at $96.17?
($96.17/share × 250 shares) - $135 = $23,907.50
LG4 8-7 Buying Stock with a Market Order You would like to buy shares of Sirius Satellite Radio (SIRI). The current ask and bid quotes are $3.96 and $3.93, respectively. You place a market buy-order for 500 shares that