Ch8RiskandReturnVideoProblems

Ch8RiskandReturnVideoProblems - Solve for I = 17.5 In other...

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Ch. 8 Risk and Return Video Problems Countrywide’s stock price in January 2003 was $13.64. It peaked at $45 in February 2007 and in July 2007, its price was $28.17. The holding period returns annualized, if held for years from 2003 to 2007: PV = -13.64 FV = 45 N = 4 Solve for I = 34.8% per year for 4 years If held for 4.5 years until July, the holding period returns were: PV = -13.64 FV = 28.17 N = 4.5
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Unformatted text preview: Solve for I = 17.5 In other words, the annual return was cut in half just by holding the stock an additional six months. In January 2008 Countrywide’s price was $6.96 and in June, $4.25. The five year holding period annualized return was: PV = -13.64 FV = 6.96 N = 5 Solve for I = -12.6% The money was indeed lost if an investor held Countrywide for this entire holding period....
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This note was uploaded on 03/02/2011 for the course BMGT 340 taught by Professor White during the Spring '08 term at Maryland.

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