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12. Suppose the current price of Clark, Inc. is selling for $50. In year one, the price falls to $25 and in year two it
12. Suppose the current price of Clark, Inc. is selling for $50. In year one, the price falls to $25 and in year two it rises back to $50. Calculate the arithmetic and geometric returns for the stock. Which one makes more sense?
13. Find the yield to maturity for a bond that has a face value of $1,000, a coupon rate of 9% and a price of $1,032.25. Assume the bond matures in 8 years and the coupons are paid semiannually.
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