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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