Please submit the answers in same excel sheet
Chapter 8 Questions Question 2Compare and contrast the nature of cash flows stemming from an investment in stock with those coming from bonds. Question 9How is the IPO price of a stock determined? Is that price likely to be the stock's intrinsic value? Question 16Is investing in options really investing, or is it more like gambling? Problems Problem 5The Spinnaker Company has paid an annual dividend of $2 per share for some time. Recently, the board of directors voted to grow the dividend by 6% per year from now on. What is the most you would be willing to pay for a share of Spinnaker if you expect a 10% return on your stock investments. Problem 7Tyler Inc.'s most recent annual dividend was $3.55 a share. The firm has been growing at a consistent 4% rate for several years, but analysts generally believe better times are ahead and future growth will be in the neighborhood of 5%. The stock is currently selling for $75. Stocks similar to Tyler earn returns ranging from 8% to 10%. a. Calculate values for a share of Tyler at interest rates of 8%, 9% and 10% b. Do you think Tyler is a good investment for the short term? That is, for someone planning to hold onto it for 10 or more years. c. Do you think it is a good investment for the short term? That is should you buy it with the expectation of selling in a relatively short period, say a year or less? d. Repeat the calculations in Part (a), assuming that instead of rising, Tyler's growth rate (1) remains at 4% or (2) declines to 3%. e. Comment on the range of prices that you've calculated in parts (a) and (d). Problem 21Seth Harris is an avid investor who likes to speculate on stock price changes. Lately, he's become bored with the slow movement of most stock prices and thinks options might be more exciting. He has been following the stock of Chelsea Club, Inc., a women's apparel manufacturer. Chelsea's stock price has been stable for more than a year, but Seth in convinced it will increase in the near future but probably not rapidly. Amanda Johnson owns 1,000 shares of Chelsea Club purchased a year ago at $37. She thinks the stock's price will continue in the upper $30s indefinitely and may even fall a little. Her Broker has recommended writing options as a source of income on stagnant stocks. Chelsea is selling for $38, and six month call options at a $36 strike price sell $4. This morning Amanda wrote call options on her 1,000 shares, which Seth bought through an options exchange. At the time of transaction: a. What was the intrinsic value of an option? b. What was the option's time premium? c. Was the call in or out of the money? d. How much has Amanda invested? e. What is the most Seth can make or lose? f. What is the most Amanda can make or lose? It's almost six months later, Chelsea is selling for $44, Amanda's options are about to expire, and Seth excericses. g. What is Seth's profit for loss? h. What is Amanda's profit or loss? i. Does Amanda incur an "opportunity loss" ? If so, how much is it? j. What would Amanda's profit or loss have been if her call had been written naked? Chapter 9 Questions Question 6The following definition applies to both investing and gambling: Putting money at risk in the hope of earning more money. In spite of this similarity, society has very different moral views of the two activities. a. Develop an argument reconciling the differences and similarities between the two concepts, That is why do people generally feel good about investing and bad about gambling? b. Discuss the difference between investing and gambling by referring to the probability distributions shown on page 416. Identify the representations of a total loss, a big win, and likely outcomes. Question 12Describe the goal of a portfolio owner in terms of risk and return. How does he or she evaluate the risks characteristics of stocks being considered for addition to the portfolio? Question 14Describe the concept of beta. Include what it measures and how it's developed. Problems Problem 7Calculate the expected return on an investment in Delta Inc's stock if the probability of returns are as follows: ReturnProbability -5%10.00% 50.25 100.3 150.25 250.1 Plot the distribution on the axes with Omega Inc. in the previous problem. Looking at the graph, which company has the lower risk/variance? If offered the choice between making an investment in Delta and in Omega Inc., which would most investors choose? Why? Problem 10A portfolio consists of the following four stocks: StockCurrent Market ValueExpected Return A$180,0008% B145,00010 C452,00012 D223,0005 $1,000,000 What is the expected return of the portfolio Problem 13The stocks in Problem 11 have the following betas. StockBeta A1.1 B0.6 C1 D1.6 E0.8 Calculate Laurel's portfolio beta for last year and for this year. Assume that the changes in investment (value) come from changing stock prices rather than buying and selling shares. What has happened to the riskiness of Laurel's portfolio? Should she be concerned?