One year ago, you purchased 1,200 shares of Berry, Mayell, and Wheeler (BMW) stock for $21.20 per share. You have received dividend payments equal to $0.60 per share. Today, you sold all of your shares for $22.20 per share. What is your total return (dollar and percent) on this investment? (4 points) [pic]
Castella, Norwood, and Ngoc (CNN) stock had returns of 8%, -2%, 4%, and 16% over the past four years. What are the mean and standard deviation of this stock for the past four years? (6 points) [pic]
The long term inflation rate average was 3.2% and you invested in long term corporate bonds over the same period which earned 6.1%. What was the average risk premium you earned? (3 points)[pic] Use the following information to answer questions 11 and 12. You purchased one of Fan, Igli, Sherrill, Harper, Evans, and Rashid (FISHER) Corp’s 8% coupon bonds one year ago for $1,028.50. These bonds make annual payments and mature six years for now. Suppose you decide to sell your bond today, when the required return on the bond is 7%. The inflation rate was 4.8% over the past year. What would be your total (i.e., nominal) rate of return on the investment? (7 points) To find the return on the coupon bond, you first need to find the price today. The bond now has six years to maturity, so the price today is: [pic] You received the coupon payments on the bond, so the nominal return was: [pic] What would be your real rate of return on the investment? (4 points) And using the Fisher equation to find the real return, we get [pic] Return and Risk: Statistics and CAPM (various points each) If the covariance of Caroline and Oberkrom (CO) Inc. stock with Van, Aleksandra, and Richter (VAR) Co. stock is0.0065, then what is the covariance of VAR Co. stock with CO Inc. stock? (3 points) Answer: -0.0065 Suppose the risk-free rate is 6.3% and the market risk premium is 8.5%. The market portfolio has a variance of 0.0498. Blagg, Elizabeth, Tendler, and April (BETA)...
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