{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

WK4 Homework - WEEK 4 HOMEWORK P6-1 You purchase 1,000...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
1 WEEK 4 HOMEWORK P6-1. You purchase 1,000 shares of Spears Grinders Inc. stock for $45 per share. A year later, the stock pays a dividend of $1.25 per share and it sells for $49. a. Calculate your total dollar return. 1,000 x ($1.25 + $4) = $5,250 b. Calculate your total percentage return. ($49 + $1.25 - $45) / $45 = 11.67%. c. Do the answers to parts (a) and (b) depend on whether you sell the stock after one year or continue to hold it? They do not depend on whether you sell the stock or hold it. P6-2. A financial adviser claims that a particular stock earned a total return of 10 percent last year. During the year the stock price rose from $30 to $32.50. What dividend did the stock pay? 0.10 = ($32.50 + D - $30) / $30 = $0.50. P7-1. a. Over the long run, the risk-premium on stocks relative to Treasury bills has been 7.6 percent in the United States. The current Treasury bill yield is 1.5%, but the historical average return on Treasury bills is 4.1%. Estimate the expected return on stocks and explain how and why you arrived at your answer.
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern