Technical Analysis

1) Remia bought Apple stock for $400 in the beginning of the year. She received a dividend

of $40 and later sold the stock for $490. What is the holding period return for Remia?

2) From the data below, determine the Microsoft Corporation's arithmetic average return

and geometric average return.

Year Return ( % )

2011 18

2012 21

2013 16

2014 11

2015 19

2016 22

2017 12

2018 -15

2019 3

3) Facebook Corporation projects following returns under different economic scenarios. The

corresponding probabilities are also given. Determine the expected return.

Economic Scenarios Return Probability

Recession (Bear) -5% 0.25

Normal 18% 0.5

Boom (Bull) 35% 0.25

4) From above data, calculate the standard deviation of Facebook stock. If the expected

Return of Google is 18% then according to coefficient of

variation measure, which stock perceived as riskier?

(Standard deviation for Google is 19)

5)

Assets Portfolio weight proportion Beta

Ford 0.3 1.2

Toyota 0.5 1.3

GM 0.2 1.25

From the above data, what is the weighted beta of the portfolio? If the risk free rate is

10% and the market rate is 18% then what should be the required rate of return on

this portfolio?

6) If a preferred stock pays an annual dividend of $20 and investors require 15% annual

return, the value of the stock is?

7) If GE stock is expected to pay a dividend of $20 per year for unlimited years and

investors requires a 14% annual return, what is the value of GE stock?

8) If Chevron stock that has paid a dividend of $10 this year and its dividend is expected

to grow at a constant rate of 8% per year and shareholders believe that fair return on this

stock given its risk features is 16%, then what would be the value of this stock?

9) Going back to Problems 7 & 8, adjust the value of both stocks with 10% tax rebate.

10) For Wal-Mart stock, let us assume that it has a beta of 1.4, current risk free rate is 10%

and expected return is 15%. What would be the cost of retained earnings based on CAPM?

11) Assume that the maintenance margin is 30% with a 50% initial margin. If the price of

the stock declined from $100 to $90 per share what is the actual margin?