Contemporary Mathematics for Business and Consumers, Eighth Edition
Robert Brechner and George Bergeman
Copyright © 2017 Cengage Learning
Level 2
Chapter 20 – Section I – Exercise 14, 15
Calculate the current yield and the price-earnings ratio for the following stocks:
Earnings
per Share
Annual
Dividend
Current
Price per
Share
Level 2
Chapter 20 – Section I – Exercise 16, 17
Calculate the missing information for the following stocks:
Note: Refer to these problems in your text for input data.
Sampson, Inc. Vista Industries
Level 1
Chapter 20 – Section I – Exercise 23
Calculate the total cost, proceeds, and gain (or loss) for the following stock transaction:
market transaction:
Buy Sell Odd Lot
Mars Distributors 775 $37.75 $34.50 1.5% 1.5% add 1%
Number
of Shares
Selling
Price
Commissions
Level 3
Chapter 20 – Section I – Exercise 25
The Newmark Corporation has 500,000 shares of common stock outstanding.
If a dividend of $425,000 was declared by the company directors last year, what is
the dividend per share of common stock?
Level 3
Chapter 20 – Section I – Exercise 26
The board of directors of Fortune Industries has declared a dividend of $3,000,000. The
company has 700,000 shares of preferred stock that pay $.90 per share and 1,600,000
shares of common stock.
a. What are the dividends due the preferred shareholders?
b. What is the dividend per share of common stock?
Level 3
Chapter 20 – Section I – Exercise 28
Bio-Science Labs stock is currently selling at $47.35. The earnings per share
is $3.14, and the dividend is $1.70.
a. What is the current yield of the stock?
b. What is the price-earnings ratio?
Level 2
Chapter 20 – Section II – Exercise 15
Calculate the accrued interest and the total purchase price of the following bond purchase:
Level 1
Chapter 20 – Section II – Exercise 19, 20
Calculate the accrued interest and the total proceeds of the following bond sales.
Note: Refer to these problems in your text for input data.
Company = Mobile Nabisco
Level 2
Chapter 20 – Section II – Exercise 23, 24
Calculate the annual interest and current yield for the following bonds:
Note: Refer to these problems in your text for input data.
Level 1
Chapter 20 – Section II – Exercise 26
On March 1, Wayne Michaels bought 10 Metro Petroleum bonds with a coupon rate
of 9.125%. The purchase price was $88.875, and the commission was $6.00 per bond.
Metro Petroleum bonds pay interest on February 1 and August 1.
a. What is the current yield of the bond?
Par value = 88 7/8
b. What is the total purchase price of the bonds?
Months since interest paid = 1
c. If Wayne sold the bonds on November 1 for 93 7/8, what are the proceeds from
the sale?
Months since interest paid = 3
Level 1
Chapter 20 – Section III – Exercise 20
Calculate the net asset value and number of shares purchased for a mutual fund having
total assets of $80,000,000 and total liabilities of $2,300,000 There are 5,000,000 out-
standing shares and an offer price of $16.10 per share. The total investment is $10,000
(round shares to thousandths, three decimal places):
Total assets = $80,000,000.00
Level 2
Chapter 20 – Section III – Exercise 25
Calculate the total cost, proceeds, total gain or loss, and return on investment for the
following mutual fund investment. The offer price is the purchase price of the shares,
and the net asset value is the price at which the shares were later sold. The number
of shares is 100 at an offer price of $15.30, net asset value of $18.80, and dividends
per share of $.45.
Shares = 100
Level 3
Chapter 20 – Section III – Exercise 26
The Victoria Growth fund has an offer price of $13.10 and a net asset value of $12.35.
a. What is the sales charge?
b. What is the sales charge percent?
Level 3
Chapter 20 – Section III – Exercise 27
The Capital MGT fund has total assets of $25,000,000 and liabilities of $3,500,000.
If there are 8,600,000 shares outstanding, what is the net asset value of the fund?
Total assets = $25,000,000.00
Level 2
Chapter 20 – Assessment Test – Exercise 19
You purchase 350 shares of Universal Metals common stock at $12.38 per share.
A few months later, you sell the shares at $9.88. Your stockbroker charges 3%
commission on round lots and an extra 1.5% on odd lots.
a. What is the total cost of the purchase?
Hint: Use the following formula model: Number of round lot shares purchased:
= RoundDown ( Total number of shares purchased / 100, 0 ) * 100
Total number of shares purchased = 350
b. What are the proceeds of the sale?
c. What is the gain or loss on the transaction?
Hint: Use an Excel If statement to test whether you have a gain or loss. Then
report the appropriate results in the form “Gain = xxxx” or “Loss = xxx”.
Level 2
Chapter 20 – Assessment Test – Exercise 41
Calculate the net asset value and number of shares purchased for the following fund
(round shares to thousandths, three decimal places): total assets, $30,000,000; total
liabilities, $1,800,000; shares outstanding, 4,000,000; offer price, $7.80; total invest-
ment, $50,000.
Total
Assets
Total
Liabilities
Shares
Outstanding
Net Asset
Value (NAV)
Offer
Price
Total
Investment
Shares
Purchased
Level 1
Chapter 20 – Assessment Test – Exercise 48
Karl Hellman invested a lump sum of $20,000 in a mutual fund with an offer price of $11.80.
How many shares did he purchase?
Level 3
Chapter 20 – Assessment Test – Exercise 49
Kyle Pressman purchased 800 shares of Three Sisters Value Fund for an offer price of $6.90
per share. He later sold the shares at a net asset value of $8.60 per share. During the
time he owned the shares, the fund paid dividends of $.24 and $.38 per share. What is
Kyle’s return on investment?
Shares = 800