Question
1A) What is the one-year holding period return for a stock that was purchased for $22.40 at the beginning of the year, paid out $1.75
1A) What is the one-year holding period return for a stock that was purchased for $22.40 at the beginning of the year, paid out $1.75 in dividends, and was sold for $28.25?
a. | 20.7% | |
b. | 26.1% | |
c. | 26.9% | |
d. | 33.9% |
1B) Suppose investors in Acme Co., Inc. expect to earn a return of 4% (with a 20% probability), a return of 10% (with a 60% probability) and a 20% return (with a probability of 20%). What is the expected return for Acmes stock?
a. | 11.3% | |
b. | 10.8% | |
c. | 34.0% | |
d. | 11.2% |
1C) What is the standard deviation of Acme Co., Inc given the expectations of a 4% return 20% of the time, a 10% return 60% of the time, and a 20% return 20% of the time?
a. | 0.27% | |
b. | 5.15% | |
c. | 23.77% | |
d. | 9.75% |
1D)
Scenario Probabilities | Scenario Returns - Security A | Scenario Returns - Security B | Scenario Returns- Security C |
.35 | 15% | 25% | -6% |
.25 | 10% | 12% | 0 |
.25 | 7% | 7% | -3% |
.15 | 5% | 1% | 4 |
What are the expected returns for each of the three stocks (A, B, and C)?
a. | 11.75%, 11.75%, 3.50% | |
b. | 10.25%, 13.65%, -2.25% | |
c. | 14.00%, 14.30%, -1.15% | |
d. | 2.00%, 1.67%, 2.17% |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started