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A) After having assessed your recommendation in regards to the device Leona is looking intowhat...

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Finance

A)

After having assessed your recommendation in regards to the device Leona is looking intowhat to do with additional surplus cash. Now her attention is on the stock market andthere is a share, Bolton Machinery, that looks promising and is behaving as a normalasset on the market. The price is currently set at 150 and there are three scenarios;Good and then the sale of the share will be at 180 and dividend at 10 Normal with a sales price of 165 and a dividend at 5 followed by Bad when the sharewill be sold at a loss of 30 and no dividend will be received. The probability for good is 25% and normal 40%.

Make an evaluation of this

B) then Bolton Machinery is behaving like a normal asset Durability Plc is the opposite. The price for the share is currently at 250 and the probabilities for the three market conditions are the same as for Bolton Machinery. However if conditions are good the sale price will be at 140 and a dividend at 3, bad will give a sale price of 320 and a dividend of 14. For normal the gain will be 10 when sold and deliver a dividend of 7.

Make an evaluation of this

C)

Leona is considering investing 2 500 000 in Bolton Machinery and 3 500 000 in Durability. Make a full analyse of this and make your recommendation for what to do.

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