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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