Question

4.

A.

A stock had returns of 21.70% (1 year ago), 2.40% (2 years ago), X (3 years ago), and ‑14.60% (4 years ago) in each of the past 4 years. Over the past 4 years, the geometric average annual return for the stock was 2.85%. Three years ago, inflation was 3.62% and the risk-free rate was 4.47%. What was the real return for the stock 3 years ago?  Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098

B

A stock had returns of 18 percent, 30 percent, and -18 percent over the past 3 years. What is the mean of the stock’s returns over the past 3 years minus the sample standard deviation of the stock’s returns from the past 3 years? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

C

Rogelio’s portfolio is worth 61,600 dollars and has three stocks. It has 13,300 dollars of stock A, which has an expected return of 6 percent; it has 2,200 shares of stock B, which has a share price of 9.5 dollars and an expected return of 10.48 percent; and it has some stock C, which has an expected return of 14.92 percent. What is the expected return of Rogelio’s portfolio? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Answer 1