This topic contains a solution. Click here to go to the answer

Author Question: The first column of the following table describes the price movement of AOL Corporation stock over a ... (Read 92 times)

jenna1

  • Hero Member
  • *****
  • Posts: 568
The first column of the following table describes the price movement of AOL Corporation stock over a five-year period. The second column gives the period's consumer price index.
 
  Calculate the real value of the stock for each time period using year 5 as the base year. If you purchased 1,000 worth of AOL Corporation in year 1, what has happened to the purchasing power of your original 1,000 investment when you sell the stock in year 5? Year AOL CPI 1996 4.00 147.8 1997 3.84 155.3 1998 7.00 163.0 1999 37.00 165.4 2000 70.00 172.1

Question 2

Refer to Scenario 7.1. The total cost to produce 50 cookies is
 
  A) 20
  B) 25
  C) 50
  D) 60
  E) indeterminate



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

amanda_14

  • Sr. Member
  • ****
  • Posts: 342
Answer to Question 1

Year Real AOL Stock Price in 2000 Dollars
1996 4.66
1997 4.26
1998 7.39
1999 38.50
2000 70.00

The real value of a year 1996 dollar in 2000 is 172.1(1)/147.8 = 1.16. I would have bought 250 shares of AOL at 1996 prices (ignoring transaction costs) with the 1,000. The value of the stock in the year 2000 is (250(70)) = 17,500. The change in my purchasing power is
(17,500 - 1,160)/1,160 = 14.09. That is, my purchasing power from investing in the stock rises by 1,409.

Answer to Question 2

A




jenna1

  • Member
  • Posts: 568
Reply 2 on: Jul 1, 2018
Gracias!


Animal_Goddess

  • Member
  • Posts: 339
Reply 3 on: Yesterday
Excellent

 

Did you know?

People who have myopia, or nearsightedness, are not able to see objects at a distance but only up close. It occurs when the cornea is either curved too steeply, the eye is too long, or both. This condition is progressive and worsens with time. More than 100 million people in the United States are nearsighted, but only 20% of those are born with the condition. Diet, eye exercise, drug therapy, and corrective lenses can all help manage nearsightedness.

Did you know?

The Centers for Disease Control and Prevention has released reports detailing the deaths of infants (younger than 1 year of age) who died after being given cold and cough medications. This underscores the importance of educating parents that children younger than 2 years of age should never be given over-the-counter cold and cough medications without consulting their physicians.

Did you know?

In inpatient settings, adverse drug events account for an estimated one in three of all hospital adverse events. They affect approximately 2 million hospital stays every year, and prolong hospital stays by between one and five days.

Did you know?

If all the neurons in the human body were lined up, they would stretch more than 600 miles.

Did you know?

In 1835 it was discovered that a disease of silkworms known as muscardine could be transferred from one silkworm to another, and was caused by a fungus.

For a complete list of videos, visit our video library