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# Chapter_5_DocCam - Chapter 5 Example on Single-Period Rate...

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Chapter 5 Example on Single-Period Rate of Return Suppose you bought a share of Home Depot at the opening price of \$33.45 a share on Monday, Dec 6, 2010. You sold the stock on Friday, Dec 10, 2010 at the closing price of \$34.40 a share. The company paid out \$0.35 a share regular dividend on Thursday, Dec 9, 2010. (a) Ignoring transaction costs, what was the five-day HPR of this investment? (b) What was the APR and EAR of this investment? (sub question, what is n in this question?) 1

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Chapter 5 Example on Multiple-Period Rate of Return Using the annual returns from 2004-2008 period in the table below, calculate the arithmetic and geometric average annual return of T-bills,

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Unformatted text preview: General Electric stock and Microsoft stock. Year T-Bill GE MSFT 2004 1.19% 20.71% 9.16% 2005 2.98%-1.43%-0.94% 2006 4.81% 9.36% 15.82% 2007 4.40% 2.69% 20.85% 2008 1.27%-53.94%-44.38% 2 Chapter 5 Example on Risk Calculate the expected return and its standard deviation of the securities in the table below. 3 Chapter 5 End of Chapter Problem 11 4 Chapter 5 Example on Inflation and Real Rate of Return What was annual real return of T-bills in 2008 if their annual nominal return over the same period was 2.93% and the annual inflation rate was 3.16%? 5 Chapter 5 6...
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