4. Consider that you buy a share of a stock that currently sells for $50 and pays an annual dividend of $2. One year from now you will buy another share of this stock for $53. Two years from now you sell both shares for $54 each. What is your average rate of return?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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4. Consider that you buy a share of a stock that currently sells for $50 and pays an annual
dividend of $2. One year from now you will buy another share of this stock for $53. Two years
from now you sel1 both shares for $54 each. What is your average rate of return?
5. Consider three stocks A, B and C with the following matrix of variances and covariances:
Stock
A
0.0225
В
C
0.0036
0.0144
А
0.01155
B
0.0036
0.0066
0.01155
0.0066
0.0121
Knowing that E(RA)=0.17; E(RB)=0.13; E(Rc)=0.11 determine the structure and risk of an
efficient portfolio of which expected return is E(R*pf)=0.12.
Transcribed Image Text:4. Consider that you buy a share of a stock that currently sells for $50 and pays an annual dividend of $2. One year from now you will buy another share of this stock for $53. Two years from now you sel1 both shares for $54 each. What is your average rate of return? 5. Consider three stocks A, B and C with the following matrix of variances and covariances: Stock A 0.0225 В C 0.0036 0.0144 А 0.01155 B 0.0036 0.0066 0.01155 0.0066 0.0121 Knowing that E(RA)=0.17; E(RB)=0.13; E(Rc)=0.11 determine the structure and risk of an efficient portfolio of which expected return is E(R*pf)=0.12.
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