1. Initial price of the stock - $79 Dividend paid - $1.45 per share Ending share price - $71 Total Stock Return = [(P1 – P0) + D]/P0 Where, P0 = Initial stock price P1 = Ending Stock price D = Dividend So, Total Return = [(71-79)+1.45]/79 = -0.08 or -8% Dividend yield = Annual Dividend/Current stock price = 1.45/71 = 0.02 or 2% Capital gain yield = (P1 – P0)/P0 = (71-79)/79 = -0.10 or -10% 2. Purchase price of 2% Preferred Stock = $95.64 Market price of stock = $96.96 Par value = $100 Total Return = [(P1 – P0) + D]/P0 Where, P0 = Initial stock price P1 = Ending Stock price D = Dividend Dividend = 2% of 100 = $2 Total Return = [(96.96 – 95.64) + 2]/95.64 = 0.03 or 3% 3. a. Arithmetic Average Returns: Large company Stocks = (3.96+14.12+19.01-14.67-32.16+37.26)/6 = 4.59 T-Bills = (4.50+4.88+3.80+6.96+4.88+6.14)/6 = 5.19 b. Standard Deviation: Large company Stocks:

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Answered Same Day Feb 26, 2021

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Preeta answered on Feb 26 2021

155 Votes

1. Initial price of the stock - $79
Dividend paid - $1.45 per share
Ending share price - $71
Total Stock Return = [(P1 – P0) + D]/P0
Where, P0 = Initial stock price
P1 = Ending Stock price
D = Dividend
So, Total Return = [(71-79)+1.45]/79
        = -0.08 or -8%
Dividend yield = Annual Dividend/Cu
ent stock price
        = 1.45/71
        = 0.02 or 2%
Capital gain yield = (P1 – P0)/P0
        = (71-79)/79
        = -0.10 or -10%
2. Purchase price of 2% Prefe
ed Stock = $95.64
Market price of stock = $96.96
Par value = $100
Total Return = [(P1 – P0) + D]/P0
Where, P0 = Initial stock price
P1 = Ending Stock price
D = Dividend
Dividend = 2% of 100
    = $2
Total Return = [(96.96 – 95.64) + 2]/95.64
    = 0.03 or 3%
3. a. Arithmetic Average Returns:
Large company Stocks = (3.96+14.12+19.01-14.67-32.16+37.26)/6
            = 4.59
T-Bills = (4.50+4.88+3.80+6.96+4.88+6.14)/6
    = 5.19
. Standard Deviation:
Large company Stocks:-
    Yea
    (Value...

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