Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question 3 The price history of stock ABC from year 0 to year 2 is as follows:
Po P₁ P₂
$50 $40 $60
a. What are the holding-period returns of stock ABC for the first year, for the second
year, and for the entire period?
b. What are the arithmetic and geometric average returns over this 2-year period?
c. The price and dividend history of stock XYZ from year 0 to year 2 are as follows:
Year Price Dividend
0
$100
1
?
$0
2
$100 $8
The price of stock XYZ in year 1 is not known. The holding-period return of stock
XYZ in the second year (from year 1 to year 2) is 20%. What is the capital gains yield
in the second year?
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Transcribed Image Text:Question 3 The price history of stock ABC from year 0 to year 2 is as follows: Po P₁ P₂ $50 $40 $60 a. What are the holding-period returns of stock ABC for the first year, for the second year, and for the entire period? b. What are the arithmetic and geometric average returns over this 2-year period? c. The price and dividend history of stock XYZ from year 0 to year 2 are as follows: Year Price Dividend 0 $100 1 ? $0 2 $100 $8 The price of stock XYZ in year 1 is not known. The holding-period return of stock XYZ in the second year (from year 1 to year 2) is 20%. What is the capital gains yield in the second year?
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