1. Scenario #1: Seneca's stock has an initial price of $85 per share. The firm paid a dividend of $1.50 per share during the year and had an ending share price of $96. What is the dividend yield, capital gain yield, and what is the percentage total return?

2. Scenario #2: Seneca's stock has an initial price of $85 per share. The firm paid a dividend of $1.50 per share during the year and had an ending share price of $71. What is the dividend yield, capital gain yield, and what is the percentage total return?

3. You purchased 250 shares of a particular stock at the beginning of the year for $65.13. The stock paid a dividend of $0.95 per share, and the stock price at the end of the year was $81.64. What is your dollar return on this investment? What is the percentage total return?

4. Suppose you bought a 7 percent coupon bond one year ago for $983. The bond sells for $1,012 today. Recall that bonds have a face value of $1,000. What was your total dollar return on this investment during the past year? What was your rate of return during the past year?

5. Use the following returns to calculate; (a) average return, (b) variance, and; (c) standard deviation for stock X and stock Y.

Returns

Year

X

Y

1

21%

24%

2

-16%

-3%

3

9%

26%

4

18%

-13%

5

4%

30%

6. Referring again to stocks X and Y, let's assume a normal distribution. Show the +/- standard deviations (and range of returns through the 99th percentile) for stock Y.

7. Again, comparing stock X and stock Y, which has the least amount of risk? Explain your answer in terms of the shape of the distribution curves.

8. You purchased a 15-year, zero-coupon bond one year ago for $295.83. The market interest rate is now 8 percent. What is your dollar return on this investment? What is the percentage total return?

9. What does the efficient market hypothesis state?

10. If a market is semistrong form efficient, it is also weak form efficient? Explain.