5UIUC%20FIN%20300%20ROI%20DDM%20Practice%20Problems%20Instructor%20SP10

5UIUC%20FIN%20300%20ROI%20DDM%20Practice%20Problems%20Instructor%20SP10

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Unformatted text preview: UNIVERSITY OF ILLINOIS College of Business - Department of Finance - Finance 300 (Financial Markets) Professor James Jackson Investment Analysis Using Market Returns and Fair Value Re-Invested Period Returns (Example #1) 1. Period Return = ($92.00 - $74.00) / $74.00 = 0.2432 2. Period Return = ($37.00 - $92.00) / $92.00 = -0.5978 3. Period Return = ($99.00 - $37.00) / $37.00 = 1.6757 4. Period Return = ($97.00 - $99.00) / $99.00 = -0.0202 5. Period Return = ($64.00 - $97.00) / $97.00 = -0.3402 6. Period Return = ($90.00 - $64.00) / $64.00 = 0.4063 1. 1 + Period Return =1+ 0.2432 = 1.2432 2. 1 + Period Return =1+ (-0.5978) = 0.4022 3. 1 + Period Return =1+ 1.6757 = 2.6757 4. 1 + Period Return =1+ (-0.0202) = 0.9798 5. 1 + Period Return =1+ (-0.3402) = 0.6598 6. 1 + Period Return =1+ 0.4063 = 1.4063 1. Investment Total $ = $1,000.00 * 1.2432 = $1,243.24 2. Investment Total $ = $1,243.24 * 0.4022 = $500.00 3. Investment Total $ = $500.00 * 2.6757 = $1,337.84 4. Investment Total $ = $1,337.84 * 0.9798 = $1,310.81Investment Total $ = $1,337....
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5UIUC%20FIN%20300%20ROI%20DDM%20Practice%20Problems%20Instructor%20SP10

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