Suppose a stock had an initial price of $119 per share, paid a dividend
of $3.20 per share during the year, and had an ending share price of
$150.
Required:
1. Compute the percentage total return.
2. What was the dividend yield?
3. What was the capital gains yield?
2. Suppose a stock had an initial price of $94 per share,
paid a dividend of $2.50 per share during the year, and had an ending
share price of $76.50.
Required:
1. Compute the percentage total return.
2. What was the dividend yield?
3. What was the capital gains yield
3. Consider the following information for a period of years.
Series Arithmetic Mean
Large-company stocks 11.7%
Small-company stocks 16.4
Long-term corporate bonds 6.6
Long-term government bonds 6.5
Intermediate-term government bonds 5.6
U.S. Treasury bills 3.8
Inflation 3.9
Required:
1. What is the historical real return on long-term government bonds?
2. What is the historical real return on long-term corporate bonds?
4. Using the following returns for X and Y.
Returns
Year X Y
1 22.5% 28.5%
2
–17.5 –4.5
3
10.5 30.5
4
21.0 –16.0
5
5.5 34.5
Required:
1. Calculate the average returns for X and Y.
2. Calculate the variances for X and Y.
3. Calculate the standard deviations for X and Y.
5. You’ve observed the following returns on Staverosky
Corporation’s stock over the past five years: –27.6 percent, 15.4
percent, 33.8 percent, 3.2 percent, and 22.2 percent.
Required:
1. What was the arithmetic average return on the stock over this five-year period?
2. What was the variance of the returns over this period?
3. What was the standard deviation of the returns over this period?
6. You find a certain stock that had returns of 15.6
percent, –22.8 percent, 28.8 percent, and 19.8 percent for four of the
last five years. Assume the average return of the stock over this period
was 13.60 percent.
Required:
1. What was the stock’s return for the missing year?
2. What is the standard deviation of the stock’s returns?
7. A stock has had returns of −18.8 percent, 28.8 percent,
21.6 percent, −9.9 percent, 34.6 percent, and 26.8 percent over the last
six years.
Required:
What are the arithmetic and geometric returns for the stock
8. A stock has had the following year-end prices and dividends:
Year Price Dividend
1 $ 64.28 —
2 71.15 $ 0.59
3 76.95 0.64
4 63.22 0.70
5 73.01 0.79
6 79.25 0.86
Required:
What are the arithmetic and geometric returns for the stock?