(A) Tom and Mary have each decided to buy 100 shares of a high performing Internet stock. The current price of the stock is $240 per share.
Tom places a market order while Mary has decided to place a limit order at $230 per share. One week later, the price of the stock never did decline but rose steadily to $305 per share.
At least on paper, how much profit or loss would Tom show after one week? Ignore transaction costs. Show your work.
Determine the profit or loss that Mary has made after one week, again ignoring transaction costs. Show your work.
If the stock had dipped in price to $230 prior to reaching $305 by week's end, what would have been Mary's profit or loss? Show your work.
(B) You are thinking of purchasing a stock that is currently priced at $120 per share. It pays an annual dividend of $5.00 per share.