Finance – Securities Analysis

Finance – Securities Analysis
1. Suppose you bought 300 shares of stock at an initial price of $39 per share. The stock paid a dividend of $0.32 per share during the following year, and the share price at the end of the year was $45. Compute your total dollar return on this investment. (Omit the “$” sign in your response.)
2. Suppose you bought 200 shares of stock at an initial price of $38 per share. The stock paid a dividend of $0.30 per share during the following year, and the share price at the end of the year was $41.

a. What is the capital gains yield? (Round your answer to 2 decimal places. Omit the “%” sign in your response.)
Capital gains yield ? %
b. What is the dividend yield? (Round your answer to 2 decimal places. Omit the “%” sign in your response.)
Dividend yield ? %
c. What is the total rate of return on the investment? (Round your answer to 2 decimal places. Omit the”%”sign in your response.)
Total rate of return ? %
3. The rate of return on Cherry Jalopies, Inc., stock over the last five years was 17 percent, 11 percent, -1 percent, 7 percent, and 10 percent. Over the same period, the return on Straw Construction Company’s stock was 16 percent, 22 percent, -1 percent, 5 percent, and 12 percent.

Calculate the variances and the standard deviations for Cherry and Straw. (Round your variance to 5 decimal places and standard deviation to 2 decimal places. Omit the “%” sign in your response.)

Cherry Straw
Variance ? ?
Standard deviation ? % ? %
4. A particular stock has a dividend yield of 1.9 percent. Last year, the stock price fell from $76 to $70. What was the return for the year? (Negative amounts should be indicated by a minus sign. Round your answer to 2 decimal place. Omit the “%” sign in your response.)
5. A stock has had returns of 25 percent, 12 percent, 6 percent, -17 percent, -6 percent, and 22 percent over the last six years. What are the arithmetic and geometric returns for the stock? (Round your answer to 2 decimal places. Omit the “%” sign in your response.)

Arithmetic return ? %
Geometric return ? %
6. Your grandfather invested $1,000 in a stock 41 years ago. Currently the value of his account is $221,000. What is his geometric return over this period? (Round your answer to 2 decimal places. Omit the “%” sign in your response.)

Geometric return ? %
7. You have found an asset with a 12.10 percent arithmetic average return and a 9.60 percent geometric return. Your observation period is 30 years. What is your best estimate of the return of the asset over the next 5 years? 10 years? 20 years? (Round your answer to 2 decimal places. Omit the “%” sign in your response.)

5 years ? %
10 years ? %
20 years ? %
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