Question

Two years ago, Conglomco stock ended at $73.02 per share. Last year, the stock paid a $0.34 per share dividend. Conglomco stock ended last year at $77.24. If you owned 200 shares of Conglomco stock, what were your dollar return and percent return last year?

Calculate the coefficient of variation for the following three stocks. Then rank them by their level of total risk, from highest to lowest:

• Conglomco has an average return of 11 percent and standard deviation of 24 percent.
• Supercorp has an average return of 16 percent and standard deviation of 37 percent.
• Megaorg has an average return of 10 percent and standard deviation of 29 percent.

Year-to-date, Conglomco has earned a −1.64 percent return, Supercorp has earned a 5.69 percent return, and Megaorg has earned a 0.23 percent return. If your portfolio is made up of 40 percent Conglomco stock, 30 percent Supercorp stock, and 30 percent Megaorg stock, what is your portfolio return?

Answer 1

Dollar return = dividend + Change in stock Price.
Dollar Return = 0.34 + (77.24-73.02)

= $ 4.56 (Ans)

Percentage Return = Dollar Return / Initial price * 100

= 4.56/73.02*100

= 6.24% (Ans)

Cefficient of Variation = Standard Deviation / Mean Return * 100%

Thus

C.V (Conglmoco) =24/11 *100 = 218%

C.V (Supercorp) = 37/16*100 = 231%

C.V ( Megaorp ) = 29/10*100% = 290%.

As higher C.V Indicates more risk,
Megaorp is Rank 1, followed by Supercorp which rank 2 and Congmco which is rank 3.
(Ans)

Portfolio return is weighted average of return of different stocks in ratio of weight of each stock.

= ((-1.64 * 40% ) + ( 5.69*30%) + (.23*30%))%

= 1.12% (Ans)