For Questions 1 through 3 use the following information: Twenty years ago you bought 100 shares of...

Question

For Questions 1 through 3 use the following information: Twenty years ago you bought 100 shares of stock of a company for $10 per share. Today you sold all 100 shares of your stock at a price of $30 per share.
Q1) What was the simple average rate of return per year for this investment?
Q2) What as the compounded (geometric) average rate of return for this investment per year?
For questions 4 through 6 use the following information: Your $100 investment produced the following yearly returns:
    Year 1
    20%
    Year 2
    -18%
    Year 3
    25%
    Year 4
    -23%
Q4) What is the simple average rate return per year?
Q5) What is the geometric (compounded) average rate of return per year).
Answer question 7 and 8
Q7) Assume that the coupon rate (yearly interest rate) on a 1-year US government bond is 2% and the coupon rate on a 5-year corporate bond issued by a large company like Samsung is 4.5%. If Samsung’s default risk premium is 1% what is the cu
ent rate of the maturity risk premium?
Q8) If the risk free rate is 3%, and the market risk premium is 7%, what is the expected return of company's publicly traded stock if the company has a beta of 2?

ba-questions-2hzpo5rx.docx

Akhilesh · Accepted Answer

Sheet1
	Q1
	return	20
	return	200%
	average return per year	10%
	Q2
	geometric return	6%
	Q4
	averate return	1.00%
	Q5
	Geometrix Return	-1.35%
	Q7
	Govt bond	2%
	Samsung Bond	4.50%
	Samsung default	1%
	Maturity Premium	1.

For Questions 1 through 3 use the following information: Twenty years ago you bought 100 shares of stock of a company for $10 per share. Today you sold all 100 shares of your stock at a price of $30...

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