MGMT_130_Lecture_10

# MGMT_130_Lecture_10 - MGMT 130 Lecture 10 Risk and Return...

This preview shows pages 1–5. Sign up to view the full content.

MGMT 130 Lecture 10 Risk and Return

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

View Full Document
Dollar Return = Dividend + Change in Market Value % Return = \$ Returns / Beginning Market Value = Income Yield% + Capital Gain% • Holding Period Return = (1 + R 1 ) x (1 + R 2 ) x … x (1+ R T ) -1 Total return over T periods Annualized Return = (1+HPR) ^ (12/T) – 1 (Here T is expressed in months… if years, use 1!) How to Calculate Returns
Example Suppose you bought 100 shares of Wal-Mart (WMT) one year ago today at \$25. Over the last year, you received \$20 in dividends (20 cents per share × 100 shares). At the end of the year, the stock sells for \$30. Your return: You invested \$25 × 100 = \$2,500. At the end of the year, you have stock worth \$3,000 and cash dividends of \$20. Your dollar gain was \$520 = \$20 + (\$3,000 – \$2,500). Your percentage gain for the year is 20.8%

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

View Full Document
Suppose we then calculate a 14% return for year 2 and a –8% return for year 3. HPR = (1.208) + (1.14) x (0.92) –1
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 04/25/2010 for the course MGMT 130A taught by Professor Stuff during the Winter '10 term at UCLA.

### Page1 / 12

MGMT_130_Lecture_10 - MGMT 130 Lecture 10 Risk and Return...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online