Question
An investor purchased the share of Neptune Corp on 1 Jan 2017 and held the investment until 31 December 2021. Details of Neptune Corps share
An investor purchased the share of Neptune Corp on 1 Jan 2017 and held the investment until 31 December 2021. Details of Neptune Corp’s share price and dividend payout during the period of investment are as follows:
Date | Share Price | Dividend |
01 Jan 2017 | 8.50 | - |
31 Dec 2017 | 8.80 | 0.30 |
31 Dec 2018 | 9.15 | 0.35 |
31 Dec 2019 | 9.22 | 0.38 |
31 Dec 2020 | 8.87 | 0.22 |
31 Dec 2021 | 9.12 | 0.30 |
Compute:
(i) Arithmetic rate of return for 2017, 2018, 2019, 2020 and 2021 separately.
(ii) Geometric average rate of return for the entire period of investment from 2017 until 2021.
(iii) Logarithmic returns for the entire period of investment from 2017 until 2021.
(b) Discuss four differences between investing in stocks and investing in bonds.
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
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