Question

Suppose you bought 650 shares of stock at an initial price of $48 per share. The stock paid a dividend of $.50 per share during the following year, and the share price at the end of the year was $43.

**a.** Compute your total dollar return on this
investment. **(A negative value should be indicated by a
minus sign.)**

**Dollar return:**

**b.** What is the capital gains yield? **(A
negative value should be indicated by a minus sign. Do not round
intermediate calculations. Enter your answer as a percent rounded
to 2 decimal places.)**

**Capital Gains Yield:**

**c.** What is the dividend yield? **(Do not
round intermediate calculations. Enter your answer as a percent
rounded to 2 decimal places.)**

**Dividend Yield:**

**d.** What is the total rate of return on the
investment? **(A negative value should be indicated by a
minus sign. Do not round intermediate calculations. Enter your
answer as a percent rounded to 2 decimal places.)**

**Total rate of return:**

Answer #1

You purchase 100 shares of stock for $25 a share. The stock pays
a $2 per share dividend at year-end.
a. What is the rate of return on your
investment if the end-of-year stock price is (i) $23; (ii) $25;
(iii) $28? (Leave no cells blank - be certain to enter "0"
wherever required. Enter your answers as a whole
percent.)
b. What is your real (inflation-adjusted) rate
of return if the inflation rate is 5%? (Do not round
intermediate...

An investor purchases 400 shares of Company A at $55 per share.
Suppose that the investor finances $8,500 of their investment with
a margin loan at 7% interest. If the price of one share of Company
A falls to $50 in a year, what is the investor’s rate of return?
(Do not round intermediate calculations.
Negative values should be indicated by a minus sign. Round
your answer to 2 decimal places.)
Rate of Return %

Assume these were the inflation rates and stock market and
Treasury bill returns between 1929 and 1933:
Year
Inflation
Stock Market Return
T-Bill Return
1929
.1
–11.8
6.1
1930
–3.7
–30.6
3.8
1931
–8.5
–40.6
1.3
1932
–10.4
–9.3
1.0
1933
.5
57.2
.6
a. What was the real return on the stock market
in each year? (Negative answers should be indicated by a
minus sign. Do not round intermediate calculations. Enter your
answers as a percent rounded to 2...

You are given the following information:
State of
Economy
Return on
Stock A
Return on
Stock B
Bear
.119
-.062
Normal
.098
.165
Bull
.090
.250
Assume each state of the economy is equally likely to happen.
Calculate the expected return of each stock. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.)
Expected return
Stock A
______%
Stock B
______%
Calculate the standard deviation of each stock. (Do not...

Two years ago, you
purchased 100 shares of General Mills Corporation. Your purchase
price was $42 a share, plus a total commission of $29 to purchase
the stock. During the last two years, you have received the
following dividend amounts: $1.92 per share for the first year and
$1.96 per share the second year. Also, assume that at the end of
two years, you sold your General Mills stock for $49 a share minus
a total commission of $34 to...

A project has the following cash flows:
Year
Cash Flow
0
$
72,500
1
–51,500
2
–28,000
What is the IRR for this project? (Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)
Internal rate of return
%
What is the NPV of this project if the required return is 6
percent? (A negative answer should be indicated by a minus
sign. Do not round intermediate calculations and round your...

You are given the following information:
State of
Economy
Return on
Stock A
Return on
Stock B
Bear
.111
-.054
Normal
.106
.157
Bull
.082
.242
Assume each state of the economy is equally likely to
happen.
Calculate the expected return of each of the following stocks.
(Do not round intermediate calculations and enter your
answers as a percent rounded to 2 decimal places, e.g.,
32.16.)
Expected return
Stock A
%
Stock B...

You purchase 310 shares of 2nd Chance Co. stock on margin at a
price of $62. The initial margin requirement is 70 percent.
a. Calculate the initial deposit. (Do
not round intermediate calculations. Round your answer to 2 decimal
places.)
b. What would be the return if you had
purchased the stock a) with margin and b) without margin under the
following situations? (A negative value should be indicated
by a minus sign. Do not round intermediate calculations. Enter your...

You are given the following information:
State of
Economy
Return on
Stock A
Return on
Stock B
Bear
.109
−
.052
Normal
.108
.155
Bull
.080
.240
Assume each state of the economy is equally likely to happen.
Calculate the expected return of each stock. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.)
Expected return
Stock A
9.90 Correct %
Stock B
14.90 Incorrect %
Calculate the standard deviation...

Suppose the returns on an asset are normally distributed. The
historical average annual return for the asset was 5.9 percent and
the standard deviation was 10.5 percent. a. What range of returns
would you expect to see 95 percent of the time? (A negative answer
should be indicated by a minus sign. Enter your answers for the
range from lowest to highest. Do not round intermediate
calculations and enter your answers as a percent rounded to 2
decimal places, e.g.,...

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