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Stock X ($) Stock Y($) Investment Value 1 January 30 50 31 December 29 56 Dividends received Q1 1 0 Q2 1.2 0 Q3 0

Stock X ($)

Stock Y($)

Investment Value

1 January

30

50

31 December

29

56

Dividends received

Q1

1

0

Q2

1.2

0

Q3

0

0

Q4

2.3

2

  1. For both stocks X and Y, calculate the holding period return (over one year) for both stocks.
  2. If you continue holding these two stocks beyond the first year, which component do you think might not continue to be realised in future (explain)
  3. Assuming that the two stocks have the same risk, which one would you prefer to own?
  4. What factors could explain why the return of these two stocks is not in the same form?

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