1. Suppose a hedge fund earns 1% per month every month.

c. If you invest $1 million today, how much money will you have in 5 years?

d. If you invest $1,000 every month for 24 months, starting immediately (i.e., first investment at time 0, last investment 23 months from now), how much will you have at the end of 2 years?

e. If you need $1 million dollars in 5 years, and you are going to invest the same amount every month for 24 months, starting immediately (i.e., just like part (d) above) how much do you have to invest?

3.The table below gives the price of a stock at the end of each of the last ten years (assume no dividends). a. What is the arithmetic average annual return on the stock? b. What is the geometric average annual return on the stock? c. What is the annual HPR on the stock?

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

$100 $70 $70 $90 $100 $125 $130 $150 $130 $90

4. You bought Coca-Cola stock 3 years ago for $45/share. It paid dividends at the end of the first, second and third years of $2/share, and you sold it for $50/share. Assuming you could reinvest the dividends at 2% per year, what is the annualized HPR on Coca-Cola stock over this 3-year period?