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1. Suppose a stock had an initial price of $38 per share, paid a dividend of $1.40 per share during the year, and had an

1. Suppose a stock had an initial price of $38 per share, paid a dividend of $1.40 per share during the year, and had an ending share price of $46. Compute the percentage total return. What was the dividend yield? The capital gains yield? Suppose you bought a 9 percent coupon bond one year ago for $970. The bond sells for $1025 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? b. What was your total nominal rate of return on this investment over the past year? c. If the inflation rate last year was 4 percent, what was your total real rate of return on this investment? Youve observed the following returns on ABC Corporations stock over the past six years: 4 percent, 10 percent, 20 percent, 16 percent, 13 percent, and 11 percent. What was the arithmetic average return on the stock over this five-year period? Using the information from the prior problem, suppose the average inflation rate over this period was 2.2 percent and the average T-bill rate over the period was 3.4 percent. a. What was the average real return on the stock? b. What was the average nominal risk premium on the stock? You purchased a zero-coupon bond five years ago for $250.00. The market interest rate is now 9 percent. If the bond had 20 years to maturity when you originally purchased it, what was your total return for the five years? You bought a share of 6.5 percent ($100 par value) preferred stock for $85.00 last year. The market price for your stock is now $95.00. What is your total return for last year?

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