Question 4.

Consider the portfolio of two investments A and B

AB

Purchase Price$1000$1000

Dividends Received

Ist Quarter$100

2^nd Quarter$200

3^rd Quarter$200

4^th Quarter$30$120

Answer the following questions accordingly:

1. What is the yearly total return on each investment.
2. If the investor can sell A at the end of the year for $1100, and sell B for $960. What is the total return on A and on B.
3. What is the rate of return on A and on B.
4. Which investment should the investor buy A or B.