1-Calculate the Arithmetic and Geometric growth rate for a company with the following EPS data

$.32

$.45

$.55

$.48

$.40

$.90

$.85

$.80

$1.30

$1.60

Show that the Arithmetic mean is incorrect. .

2-Given the following info calculate the personal rate of return for this portfolio for Jan, Feb, and Mar and the first quarter of 1998 using the Modified Dietz Method.

date	Market value $	Cash flow $	MC post cash flow $
12/31/97	200,000
1/31/98	208,000
2/16/98	217,000	40,000	257,000
2/28/98	263,000
3/22/98	270,000	-30,000	240,000
3/31/98	245,000

12- You are considering the purchase of a 2-year bond (semiannual interest payments) with a coupon rate of 8% and a current price of $964.54. The bond is callable in one year at a premium of 3% over the face (par) value. Assume that interest payments will be reinvested at 9% per year, and that the most recent interest payment occurred immediately before you purchased the bond. Calculate:

a)The Current Yield

b)The Yield to Maturity

c)The Yield to Call

d)The Total (Realized) Return if the bond is called and not called.

13-What is the modified duration of a seven-year par value bond that has a coupon rate of 9%? Use the approach where you have to calculate weights for each cash flow.

14-Calculate the duration of a ten-year level annuity with annual yield of 9%.

Hint: D = (1+y)/y T/((1+y)^T -1)

15-Salmon Fraser Corp. stock has the following probability distribution of expected prices one year from now:

State Probability Price

1 25% $50

2 40% $60

3 35% $70

If you buy Salmon Fraser today for $55 and it will pay a dividend during the year of $4 per share,

what is your expected holding period return on Salmon Fraser stock?

16-Consider the following probability distribution of returns for stocks A and B. Show ALL

calculations, not just answers.

State Probability Return on Stock A Return on Stock B

1 0.10 10% 8%

2 0.20 13% 7%

3 0.20 12% 6%

4 0.30 14% 9%

5 0.20 15% 8%

a. What are the expected rates of return of stocks

b. What are the standard deviations of stocks ?

17- How many stocks are in The Dow Jones Industrial Average and how is it calculated?

18- Computation of Macaulay duration:

a. YTM = 6%

(1)	(2)	(3)	(4)	(5)
Time Until Payment (in years)	Payment	PV of Payment Disc. at 6%	Weight of each Payment	Column (1) Column (4)
1	60
2	60
3	1060
Column Sum

b. YTM = 10%

(1)	(2)	(3)	(4)	(5)
Time Until Payment (in years)	Payment	PV of Payment Disc. at 10%	Weight of each Payment	Column (1) Column (4)
1	60
2	60
3	1060
Column Sum