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
162
36
1
5
1
016850
100
13
100
28
100
08
100
06
100
11
1
5
1
1
2
2
2
2
2
2
2
2
2
2
2
2
1
2
2
.
.
.
.
.
.
.
.
.
.
.
s
.
.
.
.
.
.
.
.
.
.
.
s
N
x
x
s
Y
X
N
i
i
X
=

+


+

+


+


=
=

+

+


+

+


=


=
∑
=
The standard deviation is the square root of the variance, so the standard deviation of each stock is:
s
X
= (.016850)
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 Spring '08
 NA
 Corporate Finance, 5year, $1.40, 1.69%, 5.54%

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