Agree with 2.5. Wasn’t the intrinsic value around 56 bucks though? (It works out to about 2.6 using that figure)
It was a short? No way.
It was not a short. They were considering selling a position, which means they were long.
AAAAAAAAAAAAAAAAAAAAAAAAAAHHHHHHHHHH !!! IT WAS A SHORT ??? Fuckin Hell. That’s why I was like wtf. That’s a point I am very frustrated not to get, cause it was a free lunch.
Or was it not ? Must have been. Cause the current price was higher than the intrinsic value, and the price was expected to converge with intrinsic value. Yet, no negative returns were a possible answer. So it must have been a short.
SkipE99 Wrote: ------------------------------------------------------- > MarshallB Wrote: > -------------------------------------------------- > ----- > > king_kong Wrote: > > > -------------------------------------------------- > > > ----- > > > Whats the big deal about this question? The > HPR > > is > > > just your return. The required return is a > > > distractor. All you need to do is take your > > return > > > (58.2-52 ) and divide it by the price paid > > (58.2). > > > Then you annualize it and if i remember > > correctly > > > it was somewhere around 2.5%. > > > > Required return was not a distractor. > > > > To calculate HPR for a stock based on intrinsic > > value at some time in the future: > > > > (current intrinsic value x (1+required > > return)^t)/current share price - 1 = HPR > > > i really hope this is right. I also did this and it matched one of the answer choices. I assumed that the stock had some form of dividend payment in the future which they didn’t mention.
Definitely a short. And explicitly said no dividends.
So what was the answer I got something like 2.11% I think.