Question 4 - Rates of Return [4 points]: Nancy Cotton bought 400 shares of NeTalk for $15 per share. One year later, Nancy sold the stock for $20 per share, just after she received a $0.50 cash dividend from the company. a. What is the total dollar return earned by Nancy for the year? b. What is the rate of return earned by Nancy? C. Separate the rate of return computed in part (b) into the dividend yield and the capital gain. In other words, compute the dividend yield and the capital gain that Nancy earned by holding NeTalk for one year. Question 5 - Portfolio Return [4 points]: Harold Rawlings has computed the returns he earned last year from each of the stocks he holds in his portfolio. The individual returns and the amounts he had invested in each stock at the beginning of the year are shown in the following table: Stock Return Amount Invested AT&T 22.5% $4,200 GM 12.3 5,520 Danka -44.7 2,200 Suiza Foods 100.0 3,080 a. Compute the return that Harold earned on his portfolio during the year. b. Harold has decided to keep Danka in his portfolio, even though it has experienced financial difficulties and performed very poorly last year, because he expects a significant turnaround that will generate a 25 percent return next year. Suppose that Harold is correct. Assuming that the returns from the other stocks remain the same as last year, compute the return on the portfolio for next year. (Hint: The portfolio weights for the stocks change based on the returns earned last year, so the values of the stocks at the end of the year should be used to compute the new weights.)