Advanced Financial Management Assignment -
Please answer below each question.
Question 1 - You bought 100 shares of IBM at $90/share one year ago. The stock price is now $100, and you also receive a cash dividend of $2/share. How much is the rate of return?
Question 2 - Based on a study of U.S. capital markets for the 1900-2000 period, the geometric average returns on U.S. Treasury bills, government bonds, and common stocks are 4.0%, 5.2%, and 11.7%, respectively. Suppose $1,000 was invested at the beginning of 1900 in the each of the three securities. Please calculate the value of each investment by the end of 2000. [Note: There are 101 years during the 1900-2000 period.]
Question 3 - We have the following information for the XYZ stock:
|
Year
|
Annual Return
|
|
2014
|
10%
|
|
2015
|
-15%
|
|
2016
|
15%
|
|
2017
|
20%
|
(1) Calculate the arithmetic average annual return.
(2) Calculate the geometric average annual return.
(3) Calculate the standard deviation of the returns.
(4) If $1000 is invested in the stock at the start of 2014, how much will it become by year-end 2017?
Question 4 - An investor invested $1000 in a mutual fund at the start of 2009. At year-end 2017, this investment grew to $3500. How much is the geometric annual return during this holding period?