t about ch 1. Timothy purchased 100 shares of Dropbox's common stock for $25 per share one year ago. During the year, all of his shares of Dropbox today, what rate of return would he realize? Answer: Realized retum- 2. San Diego County Local Bank must choose between two asset purchases. The annual rate of return and related probabilities given below summarize the firm's analysis. Rate of Return Probability Rate of Return Probability 40% 20 10% 5% 15 25 15 20 30 For each asset, compute (a) the expected rate of return. (b) the standard deviation of the expected return. (c) the coefficient of variation of the return. (d) Which asset should Champion select? 3. Given the following probability distribution for assets X and Y, compute the expected rate of return, variance, standard deviation, and coefficient of variation for the two assets. Which asset is a better investment? RetumPro Retum 10% Prob 0.20 0.30 0.40 0.35 0.40 12 12 4. Michael bought 100 shares of a company's stock for $22.00 per share on January 1, 2013. He received a dividend of $2.00 per share at the end of 2013 and $3.00 per share at the end of 2014. At the end of 2015, Michael collected a dividend of $4.00 per share and sold his stock for $18.00 per share. What was Michael's realized holding period return? What was Michael's compound annual rate of return? Explain the difference? 5. Jake purchased a bounce house one year ago for $6,500. During the year it generated $4,000 in cash flow. If Jake sells the bounce house today, he could receive $6,100 for it. What would be his rate of return under these conditions