Question

1. Calculate the rates of return (holding period returns) for the following stocks:   Stock Beginning price:...

1. Calculate the rates of return (holding period returns) for the following stocks:

 Stock Beginning price: P0 Ending price: P1 Dividend payment: D1 A 21.38 16.06 2.6 B 108.74 118.92 5.25 C 4.25 5.58 0.19

Part 1

What was the rate of return for stock A?

Part 2

What was the rate of return for stock B?

Part 3

What was the rate of return for stock C?

2. You bought Samsung stock for \$45 on April 1. The stock paid a dividend of \$3 on July 1, and had a price of \$53. It is now Oct. 1, and the stock price is \$60.

Part 1

What was the arithmetic average quarterly return?

Part 2

What was the geometric average return per quarter?

3. You've recorded the following prices and dividend payments for a stock:

 Month Stock price Dividend 1 43.28 2 43.44 0.65 3 41.86 4 44.15 5 44.34 0.65

Part 1

What was the return in month 5?

Part 2

What was the arithmetic average monthly return?

Part 3

What was the geometric average return per month

Part 1.

Rate of Return = (Dividend Received + Ending Price – Beginning Price) / Beginning Price * 100
Rate of Return = (\$2.60 + \$16.06 - \$21.38) / \$21.38 * 100
Rate of Return = -\$2.72 / \$21.38 * 100
Rate of Return = -12.72%

Part 2.

Rate of Return = (Dividend Received + Ending Price – Beginning Price) / Beginning Price * 100
Rate of Return = (\$5.25 + \$118.92 - \$108.74) / \$108.74 * 100
Rate of Return = \$15.43 / \$108.74 * 100
Rate of Return = 14.19%

Part 3.

Rate of Return = (Dividend Received + Ending Price – Beginning Price) / Beginning Price * 100
Rate of Return = (\$0.19 + \$5.58 - \$4.25) / \$4.25 * 100
Rate of Return = \$1.52 / \$4.25 * 100
Rate of Return = 35.76%