Corporate Finance

Corporate Finance - Total dollar return = ($14.20 $12.70 +...

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General Feedback: Nominal return = ($55.90 $53.60 + $1.50) / $53.60 = 7.09 percent; Real return = 7.09 percent 2.9 percent = 4.19 percent = 4.2 percent Geometric return = (1.05 1.10 .92 1.16) .25 1 = 5.37 percent; Arithmetic average = (.05 + .10 .08 + .16) / 4 = 5.75 percent Return for year 2 = ($22.90 $22.57 + $.30) / $22.57 = 2.7913 percent; Return for year 3 = ($22.26 $22.90 + $.31) / $22.90 = 1.4410 percent; Return for year 4 = ($24.08 $22.26 + $.33) / $22.26 = 9.6586 percent; Geometric return = (1.027913 .985590 1.096586) .3333 1 = 3.6 percent Geometric average = (1.05 1.16 .90 1.18) .25 1 = 6.6 percent Total percentage return = ($45.20 $48.30 + $.40 + $.40) / $48.30 = 4.8 percent (loss) the risk premium on U.S. Treasury bills has been zero percent.
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Unformatted text preview: Total dollar return = ($14.20 $12.70 + $.05) 1,300 = $2,015 Arithmetic average = (.26 + .04 .30 + .43 + .07) / 5 = 10.0 percent; Geometric return = (1.26 1.04 .70 1.43 1.07) .20 1 = 7.0 percent Nominal return = ($37.51 $31.88 + $.46) / $31.88 = 19.10 percent; Real return = 19.10 percent 3.3 percent = 15.8 percent The annual rate of return was always positive. Uptown Stores just announced they are increasing their annual dividend from $1.34 per share to $1.40 per share. If the dividend yield remains at its pre-announcement level, then you know the stock price: increased proportionately with the dividend increase....
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