# Chapter 2_Solutions_14thEdition.doc - Chapter2...

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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

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