Financial Planning Exercise $1$

Ranking investments by expected returns

What makes for a good investment? Use the approximate yield formula or a financial calculator to rank the following investments according to their expected returns. Round the answers to two decimal places. Do not round intermediate calculations.

Buy a stock for $$45$ a share, hold it for $3$ years, then sell it for $$80$ a share $($the stock pays annual dividends of $$3$ a share$).$

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Buy a security for $$20,$ hold it for $3$ years, then sell it for $$60($current income on this security is zero$).$ Do not round intermediate calculations.

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Buy a $1-$year, $12$ percent note for $$940($assume that the note has a $$1,000$ par value and that it will be held to maturity$).$ Do not round intermediate calculations.

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