Question
1.3 HPR and excess return: Suppose that you bought a share of stock of Company ABC at $100 on January 1, 2019 and sold it
1.3
HPR and excess return: Suppose that you bought a share of stock of Company ABC at $100 on January 1, 2019 and sold it at $110 on January 1, 2020. You received $5 as cash dividend just before you sold it.
1.3.a What is the HPR of this investment for you? 1.3.b Suppose the risk-free rate is 2%. What is the excess return of this investment?
2.1
Suppose a stock investment portfolio has an expected return of 20% a year. If the risk-free rate is 2% a year, and the expected return of the stock market is 10% a year.
2.1.a What is the beta of the portfolio? 2.1.b Is this portfolio aggressive or defensive?
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