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1: Suppose you invest in Stock A at $120 and your investment period is 1 year. At the end of the year, the stock price
1: Suppose you invest in Stock A at $120 and your investment period is 1 year. At the end of the year, the stock price rises to $150 and offers you $6 cash dividend. What is the Holding Period Return (HPR) of your investment? Question 2: Suppose you invest $200 in Fund A for 1 year, which offers you semiannual rate at 10%. (1) What will be the EAR for your investment? (2) If there is another Fund, Fund B, which offers monthly rate at 2%. All other conditions being equal, if you can choose to invest in either Fund A or Fund B. Which one could be a better choice? Why? Question 3: (1) If you invest $250 for 5 years into Fund K which offers you an interest rate at 10% per year. At the end of this investment, how much will you get from this investment? (i.e. Calculate the FV of your investment.) (2) If you will get $120 at the end of your 2-year investment in Fund F. Fund F offers you 25% per year. How much do you need to invest today for this investment? (i.e. What is the PV of this investment?)
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