Chapter 2_Solutions_14thEdition.doc - Chapter2...

This preview shows page 1 - 2 out of 3 pages.

The preview shows page 1 - 2 out of 3 pages.
Chapter 2The Domestic and International Financial MarketplaceCHAPTER 2THE DOMESTIC AND INTERNATIONALFINANCIAL MARKETPLACESOLUTIONS TO PROBLEMS:1. Returns over the past 12 months:a. +0.3%b. -4.6%c. +10.2%d. +1.2%2.Percentage Holding Period (HP) Return= [(4400 - 4000 + 4(40))/4000] x 100%=14%Note:This problem ignores transaction costs.Also, since the stockhas been sold, next year’s expected price performance is irrelevant.3.Percentage HP Return = [(9500 - 10,000 + 2(600))/10,000] x100%=7%Note:This solution ignores interest the investor may havereceived from reinvesting the first $600 interest payment.The information about the common stock purchases is notrelevant in computing bond returns.4.Percentage Holding Period Return:= [($100,000 - $99,500)/$99,500] x 100% =0.5025%On an annual basis, this is slightly greater than 6%.5.Percentage Holding Period Return:= [($1,000 - $975 + $60)/$975] x 100% =8.72%6.a.ExpectedPercentage Holding Period Return =[(65 - 60 + 4)/60] x 100% =15.0%b.RealizedPercentage Holding Period Return =[(75 - 60 + 4)/60] x 100% =31.67%c.RealizedPercentage Holding Period Return =[(58 - 60 + 4)/60] x 100% =3.33%d.RealizedPercentage Holding Period Return =[(50 - 60 + 4)/60] x 100% =-10.0%2-1Internal

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 3 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Spring
Professor
Nathan
Tags
United States dollar, Percentage Holding Period, International Financial Marketplace

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture