finance exam 2

# finance exam 2 - Dividend Yield= Dt 1/Pt Capital Gains...

• Notes
• michig1210
• 4
• 100% (1) 1 out of 1 people found this document helpful

This preview shows pages 1–2. Sign up to view the full content.

Dividend Yield= D t +1 /P t Capital Gains Yield= (P t+1 -P t )/P t Average Return of Investments Small Company Stocks- 17.5% Large Company Stocks- 12.4% Long-Term Corporate Bonds- 6.2% Long-Term Government Bonds- 3.8% Inflation- 3.1% Risk Premium- The excess return required from an investment in a risky asset over that required from a risk-free investment Standard Deviation 1. Find the Actual Return of each investment period 2. Calculate the Average Return of the investment 3. Subtract the Actual Return from the Average Return 4. Square the number you get from step 3 5. Sum up column 4 and divide by (# of returns -1) (Variance) 6. Take the square root of the Variance (Standard Deviation) Variance and SD are used to measure volatility Geometric Average Return- What you actually earned per year on average, compounded annually (Used for very long forecasts covering many decades) [(1+R 1 ) x (1+R 2 ) x (1+R t )] 1/T -1 Arithmetic Average Return- What you earned in a typical year (Used for long period od time to

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.
• Spring '08
• mishra
• Finance, average return

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern