Topic 2
TOPIC 1
USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
Assume you bought 100 shares of NewTech common stock on January 15, 2003 at $50.00 per share and sold it on January 15, 2004 for $40.00 per share.
1 What was your holding period return?
2 What was your holding period yield?
USE THE FOLLOWING INFORMATION OR THE NEXT TWO PROBLEMS
Suppose you bought a GM corporate bond on January 25, 2001 for $750, on January 25, 2004 sold it for $650.00.
3 What was your annual holding period return?
4 What was your annual holding period yield?
USE THE FOLLOWING INFORMATION FOR THE NEXT FOUR PROBLEMS
The common stock of XMen Inc. had the following historic prices.
Time Price of X-Tech
3/01/1999 50.00
3/01/2000 47.00
3/01/2001 76.00
3/01/2002 80.00
3/01/2003 85.00
3/01/2004 90.00
5 What was your holding period return for the time period 3/1/1999 to 3/1/2004?
6 What was your annual holding period yield (Annual HPY)?
7 What was your arithmetic mean annual yield for the investment in XMen Industries.
8 What was your geometric mean annual yield for the investment in XMen?
USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS
You have concluded that next year the following relationships are possible:
Economic Status Probability Rate of Return
Weak Economy .15 -5%
Static Economy .60 5%
Strong Economy .25 15%
9 What is your expected rate of return [E(Ri)] for next year?
10 Compute the standard deviation of the rate of return for the one year period.
11 Compute the coefficient of variation for your portfolio.
USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
Assume that during the past year the consumer price index increased by 1.5 percent and the securities listed below returned the following nominal rates of return.
U.S. Government T-bills 2.75% U.S. Long-term bonds 4.75%
12 What are the real rates of return for each of these securities?
13 If next year the real rates all rise by 10 percent while inflation climbs from 1.5
USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
Assume you bought 100 shares of NewTech common stock on January 15, 2003 at $50.00 per share and sold it on January 15, 2004 for $40.00 per share.
1 What was your holding period return?
2 What was your holding period yield?
USE THE FOLLOWING INFORMATION OR THE NEXT TWO PROBLEMS
Suppose you bought a GM corporate bond on January 25, 2001 for $750, on January 25, 2004 sold it for $650.00.
3 What was your annual holding period return?
4 What was your annual holding period yield?
USE THE FOLLOWING INFORMATION FOR THE NEXT FOUR PROBLEMS
The common stock of XMen Inc. had the following historic prices.
Time Price of X-Tech
3/01/1999 50.00
3/01/2000 47.00
3/01/2001 76.00
3/01/2002 80.00
3/01/2003 85.00
3/01/2004 90.00
5 What was your holding period return for the time period 3/1/1999 to 3/1/2004?
6 What was your annual holding period yield (Annual HPY)?
7 What was your arithmetic mean annual yield for the investment in XMen Industries.
8 What was your geometric mean annual yield for the investment in XMen?
USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS
You have concluded that next year the following relationships are possible:
Economic Status Probability Rate of Return
Weak Economy .15 -5%
Static Economy .60 5%
Strong Economy .25 15%
9 What is your expected rate of return [E(Ri)] for next year?
10 Compute the standard deviation of the rate of return for the one year period.
11 Compute the coefficient of variation for your portfolio.
USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
Assume that during the past year the consumer price index increased by 1.5 percent and the securities listed below returned the following nominal rates of return.
U.S. Government T-bills 2.75% U.S. Long-term bonds 4.75%
12 What are the real rates of return for each of these securities?
13 If next year the real rates all rise by 10 percent while inflation climbs from 1.5