Practice Questions - Risk and Return 1. Holding Period Return A stock has had returns of 14.38 percent, 8.43 percent, 11.97 percent, 25.83 percent, and 9.17 percent over the past five years, respectively. What was the holding period return for the stock? 2. Calculating Returns You bought a stock three months ago for $62.18 per share. The stock paid no dividends. The current share price is $65.37. What is the APR of your investment? The EAR? 3. Calculating Returns and Variability You find a certain stock that had returns of 12 percent, 215 percent, 13 percent, and 27 percent for four of the last five years. If the average return of the stock over this period was 10.5 percent, what was the stocks return for the missing year? What is the standard deviation of the stocks returns? 4. Using Return Distributions Suppose the returns on long-term government bonds are normally distributed. Based on the historical record, what is the approximate probability that your return on these bonds will be less than 23.7 percent in a given year? What range of returns would you expect to see 95 percent of the time? What range would you expect to see 99 percent of the time?