Question
b) The year-by-year annual returns after the World War II are provided below. Use =AVERAGE function to compute the post-WW2 Years 1946-2020 average annual return
b) The year-by-year annual returns after the World War II are provided below. Use =AVERAGE function to compute the post-WW2 Years 1946-2020 average annual return for S&P stock market index (Rm) and for US risk-free T-bill (Rf), respectively. With such Rm and Rf amounts, and if Microthins stock beta = 1.25 (based on the period of Y1946-2020), what shall be the required return amount on Microthin stock if you apply the CAPM formula?
| Year | S&P 500 Stocks | 3-month T.Bill |
| 1946 | -8.43% | 0.38% |
| 1947 | 5.20% | 0.57% |
| 1948 | 5.70% | 1.02% |
| 1949 | 18.30% | 1.10% |
| 1950 | 30.81% | 1.17% |
| 1951 | 23.68% | 1.48% |
| 1952 | 18.15% | 1.67% |
| 1953 | -1.21% | 1.89% |
| 1954 | 52.56% | 0.96% |
| 1955 | 32.60% | 1.66% |
| 1956 | 7.44% | 2.56% |
| 1957 | -10.46% | 3.23% |
| 1958 | 43.72% | 1.78% |
| 1959 | 12.06% | 3.26% |
| 1960 | 0.34% | 3.05% |
| 1961 | 26.64% | 2.27% |
| 1962 | -8.81% | 2.78% |
| 1963 | 22.61% | 3.11% |
| 1964 | 16.42% | 3.51% |
| 1965 | 12.40% | 3.90% |
| 1966 | -9.97% | 4.84% |
| 1967 | 23.80% | 4.33% |
| 1968 | 10.81% | 5.26% |
| 1969 | -8.24% | 6.56% |
| 1970 | 3.56% | 6.69% |
| 1971 | 14.22% | 4.54% |
| 1972 | 18.76% | 3.95% |
| 1973 | -14.31% | 6.73% |
| 1974 | -25.90% | 7.78% |
| 1975 | 37.00% | 5.99% |
| 1976 | 23.83% | 4.97% |
| 1977 | -6.98% | 5.13% |
| 1978 | 6.51% | 6.93% |
| 1979 | 18.52% | 9.94% |
| 1980 | 31.74% | 11.22% |
| 1981 | -4.70% | 14.30% |
| 1982 | 20.42% | 11.01% |
| 1983 | 22.34% | 8.45% |
| 1984 | 6.15% | 9.61% |
| 1985 | 31.24% | 7.49% |
| 1986 | 18.49% | 6.04% |
| 1987 | 5.81% | 5.72% |
| 1988 | 16.54% | 6.45% |
| 1989 | 31.48% | 8.11% |
| 1990 | -3.06% | 7.55% |
| 1991 | 30.23% | 5.61% |
| 1992 | 7.49% | 3.41% |
| 1993 | 9.97% | 2.98% |
| 1994 | 1.33% | 3.99% |
| 1995 | 37.20% | 5.52% |
| 1996 | 22.68% | 5.02% |
| 1997 | 33.10% | 5.05% |
| 1998 | 28.34% | 4.73% |
| 1999 | 20.89% | 4.51% |
| 2000 | -9.03% | 5.76% |
| 2001 | -11.85% | 3.67% |
| 2002 | -21.97% | 1.66% |
| 2003 | 28.36% | 1.03% |
| 2004 | 10.74% | 1.23% |
| 2005 | 4.83% | 3.01% |
| 2006 | 15.61% | 4.68% |
| 2007 | 5.48% | 4.64% |
| 2008 | -36.55% | 1.59% |
| 2009 | 25.94% | 0.14% |
| 2010 | 14.82% | 0.13% |
| 2011 | 2.10% | 0.03% |
| 2012 | 15.89% | 0.05% |
| 2013 | 32.15% | 0.07% |
| 2014 | 13.52% | 0.05% |
| 2015 | 1.38% | 0.21% |
| 2016 | 11.77% | 0.51% |
| 2017 | 21.64% | 1.39% |
| 2018 | -4.23% | 2.37% |
| 2019 | 31.22% | 1.55% |
| 2020 | 18.01% | 0.09% |
c) Based on your answers to (a) and (b), and applying both NPV and IRR rules, has your Microthin stock investment over the "Dec 2016 Dec 2020 period been good or bad? Please show excel calculations.
Question 1: Show Excel functions used in your answers a) We are given the information that Microthin's stock price was $21 in December 2016, $29 in December 2017, $27 in December 2018, $20 in December 2019, and $26 in December 2020. It also pays annual dividend amounts varying from 2016 through 2020. Let's assume you do the following transactions: a) In the end of December 2016: buy 30,000 Microthin shares; b) In the end of December 2017: collect the dividends ($0.39 per share) on your shares, and then sell 10,000 shares; c) In the end of December 2018: collect the dividends ($0.43 per share) on your remaining shares, and then buy another 15,000 shares; d) In the end of December 2019: collect the dividends ($0.50 per share) on your remaining shares, and then sell another 10,000 shares. e) In the end of December 2020: collect the dividends ($0.52 per share) on your remaining shares, and then sell all your remaining shares. What should be the IRR during the "December 2016 - December 2020" period for your Microthin stock investment? Question 1: Show Excel functions used in your answers a) We are given the information that Microthin's stock price was $21 in December 2016, $29 in December 2017, $27 in December 2018, $20 in December 2019, and $26 in December 2020. It also pays annual dividend amounts varying from 2016 through 2020. Let's assume you do the following transactions: a) In the end of December 2016: buy 30,000 Microthin shares; b) In the end of December 2017: collect the dividends ($0.39 per share) on your shares, and then sell 10,000 shares; c) In the end of December 2018: collect the dividends ($0.43 per share) on your remaining shares, and then buy another 15,000 shares; d) In the end of December 2019: collect the dividends ($0.50 per share) on your remaining shares, and then sell another 10,000 shares. e) In the end of December 2020: collect the dividends ($0.52 per share) on your remaining shares, and then sell all your remaining shares. What should be the IRR during the "December 2016 - December 2020" period for your Microthin stock investmentStep by Step Solution
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Binary Options Trading Techniques For Accurate Price Direction
Authors: Emegha Omoruyi Emmanuel
1st Edition
1500547271, 978-1500547271
