*PLEASE SHOW ALL WORK FOR EVERY QUESTION*

QUESTION 1:

An investor purchased a bond one year ago for $980. He received $17 in interest and sold the bond for $987. What is the holding-period return on his investment?

Note: Express your answer as a percentage with no percentage sign.

QUESTION 2: The stock of company XYZ currently trades at $190 and just paid a dividend of $3.8. Suppose that your expectations regarding the stock price and dividends next year are as follows:

State of the market	Probability	Dividend	Price
Boom	0.35	$4	$240
Normal	0.55	$4	$200
Recession	0.10	$0	$120

A: Compute the expected rate of return of XYZ. Express your answer as a percentage with two decimals and no percentage sign.

B: Compute the standard deviation of the rate of return of XYZ. Express your answer as a percentage with two decimals and no percentage sign.