1A) What is the one-year holding period return for a stock that was purchased for...
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1A) What is the one-year holding period return for a stock that was purchased for $22.40 at the beginning of the year, paid out $1.75 in dividends, and was sold for $28.25?
a.
20.7%
b.
26.1%
c.
26.9%
d.
33.9%
1B) Suppose investors in Acme Co., Inc. expect to earn a return of 4% (with a 20% probability), a return of 10% (with a 60% probability) and a 20% return (with a probability of 20%). What is the expected return for Acmes stock?
a.
11.3%
b.
10.8%
c.
34.0%
d.
11.2%
1C) What is the standard deviation of Acme Co., Inc given the expectations of a 4% return 20% of the time, a 10% return 60% of the time, and a 20% return 20% of the time?
a.
0.27%
b.
5.15%
c.
23.77%
d.
9.75%
1D)
Scenario Probabilities
Scenario Returns - Security A
Scenario Returns - Security B
Scenario Returns- Security C
.35
15%
25%
-6%
.25
10%
12%
0
.25
7%
7%
-3%
.15
5%
1%
4
What are the expected returns for each of the three stocks (A, B, and C)?
a.
11.75%, 11.75%, 3.50%
b.
10.25%, 13.65%, -2.25%
c.
14.00%, 14.30%, -1.15%
d.
2.00%, 1.67%, 2.17%
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