This preview shows pages 1–2. Sign up to view the full content.
1.
The return of any asset is the increase in price, plus any dividends or cash flows, all divided by
the initial price. The return of this stock is:
R = [($94 – 83) + 1.40] / $83
R = .1494 or 14.94%
2.
The dividend yield is the dividend divided by price at the beginning of the period, so:
Dividend yield = $1.40 / $83
Dividend yield = .0169 or 1.69%
And the capital gains yield is the increase in price divided by the initial price, so:
Capital gains yield = ($94 – 83) / $83
Capital gains yield = .1325 or 13.25%
7.
The average return is the sum of the returns, divided by the number of returns. The average return for
each stock was:
[
]
%
.
.
.
.
.
.
N
x
X
N
i
i
00
10
or
.1000
5
13
28
08
06
11
1
=
+
+

+
=
=
∑
=
[
]
%
.
.
.
.
.
.
N
y
Y
N
i
i
20
16
or
.1620
5
43
12
21
07
36
1
=
+

+

=
=
∑
=
We calculate the variance of each stock as:
(
29
(
29
(
29
(
29
(
29
(
29
(
29
{
}
(
29
(
29
(
29
(
29
(
29
{
}
061670
162
43
162
12
162
21
162
07
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview. Sign up
to
access the rest of the document.
 Spring '08
 NA
 Corporate Finance

Click to edit the document details