1.) Suppose you bought a bond with an annual coupon rate of 8.4 percent one year ago for $907. The bond sells for $946 today.

a.Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?(Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

b.What was your total nominal rate of return on this investment over the past year?

c.If the inflation rate last year was 4.4 percent, what was your total real rate of return on this investment?

2.) Consider the following information on large-company stocks for a period of years.

Series Arithmetic Mean

Large-company stocks 15.5%

Inflation 3.6

a.What was the arithmetic average annual return on large-company stocks in nominal terms?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b.What was the arithmetic average annual return on large-company stocks in real terms?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

3.) Use the following returns forXandY.

Returns

Year X Y

1 21.6%25.8%

2 -16.6 -3.6

3 9.6 27.8

4 19.2-14.2

5 4.6 31.8

• Calculate the average returns forXandY.
• Calculate the variances forXandY
• Calculate the standard deviations for X and Y.

4.) You find a certain stock that had returns of 15 percent, -22.5 percent, 28.5 percent, and 19.5 percent for four of the last five years. Assume the average return of the stock over this period was 13 percent.

-What was the stock's return for the missing year?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

-What is the standard deviation of the stock's returns?

5.) Assume the returns from holding small-company stocks are normally distributed. Also assume the average annual return for holding the small-company stocks for a period of time was 15.3 percent and the standard deviation of those stocks for the period was 33.2 percent. Use the NORMDIST function in Excel to answer the following questions.

-What is the approximate probability that your money will double in value in a single year?(Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimalplaces, e.g., 32.161.)

-What is the approximate probability that your money will triple in value in a single year?