FIN_355_Homework_and_Solutions[1]

FIN_355_Homework_and_Solutions[1] - FIN 355 Homework...

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FIN 355 Homework Chapter 1 (P34-35): Questions and Problems 1, 2, 3, 6, 18, 19 Chapter 2 (P68-69): Questions and Problems 1, 2, 3, 6, 7, 8, 12, 15, 25 Chapter 3 (P93-95): Questions and Problems 5, 6, 7, 18, 20 Chapter 4 (P130-132): Questions and Problems 3-9, 16, 17 Chapter 5 (P162-164): Questions and Problems 1–7, 14–17 Chapter 6 (P200-202): Questions and Problems 1, 2, 6–10, 12–20 Chapter 9 (P311-312): Questions and Problems 1, 4, 7, 8, 12, 13 Chapter 10 (P345-346): Questions and Problems 2, 4, 6, 8, 11, 13, 14, 22–24 Chapter 11 (P375-377): Questions and Problems 1–3, 8, 9, 11–13 Chapter 12 (P408-410): Questions and Problems 1–9, 12, 20 Chapter 13 (P432-434): Concept Questions: 1–4, 6, 7 Questions and Problems 5, 15–17 Chapter 14 (P463-465): Questions and Problems 3, 6–12, 14, 15, 17, 22 Chapter 15 (P504-506): Questions and Problems 1, 2, 8, 9, 10, 15, 16, 20, 21 Chapter 16 (P542-543): Concept Questions: 7; Questions and Problems 9, 10
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FIN 355 Homework Solutions Chapter 1 A Brief History of Risk and Return 1. Total dollar return = 100($82 – 73 + 0.88) = $988.00 Whether you choose to sell the stock or not does not affect the gain or loss for the year, your stock is worth what it would bring if you sold it. Whether you choose to do so or not is irrelevant (ignoring commissions and taxes). 2. Capital gains yield = ($82 – 73)/$73 = 12.33% Dividend yield = $0.88/$73 = 1.21% Total rate of return = 12.33% + 1.21% = 13.53% 3. Dollar return = 750($68.40 – 73 + 0.88) = –$2,790.00 Capital gains yield = ($68.40 – 73)/$73 = –6.30% Dividend yield = $0.88/$73 = 1.21% Total rate of return = –6.30% + 1.21% = –5.10% 6. Stock A: R A = (0.17 + 0.09 – 0.14 + 0.24 + 0.13)/5 = 0.49 / 5 = 9.80% Var = 1/4[(.17 – .098) 2 + (.09 – .098) 2 + (–.14 – .098) 2 + (.24 – .098) 2 + (.13 – .098) 2 ] = 0.02077 Standard deviation = (0.02077) 1/2 = 0.1441 or 14.41% Stock B: R B = (0.21 + 0.07 – 0.10 + 0.26 + 0.15)/5 = 0.59 / 5 = 11.80% Var = 1/4[(.21 – .118) 2 + (.07 – .118) 2 + (–.10 – .118) 2 + (.26 – .118) 2 + (.15 – .118) 2 ] = 0.01987 Standard deviation = (0.01987) 1/2 = 0.1410 or 14.10% 18. R A = (–0.15 + 0.12 + 0.15 + 0.22 + 0.11)/5 = .0900 or 9.00% R G = [(1 – .15)(1 + .12)(1 + .15)(1 + .22)(1 + .11)] 1/5 – 1 = .0819 or 8.19% 19. R 1 = ($92.68 – 77.50 + 0.64) / $77.50 = 20.41% R 2 = ($98.58 – 92.68 + 0.72) / $92.68 = 7.14% R 3 = ($82.20 – 98.58 + 0.80) / $98.58 = –15.80% R 4 = ($97.15 – 82.20 + 1.20) / $82.20 = 19.65% R 5 = ($110.19 – 97.15 + 1.60) / $97.15 = 15.07% R A = (0.2041 + .0714 – .1580 + 0.1965 + 0.1507)/5 = .0929 or 9.29% R G = [(1 + .2041)(1 + .0714)(1 – .1580)(1 + .1965)(1 + .1507)] 1/5 – 1 = .0838 or 8.38%
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1 Chapter 2 Buying and Selling Securities 1. Maximum investment = $13,000 / .60 = $21,667 Number of shares = $21,667 / $71 per share = 305.16 or 305 shares 2. Margin loan = ($53 × 500) – $11,000 = $15,500 Margin requirement = $11,000 / ($53 × 500) = 0.4151 or 41.51%
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This note was uploaded on 09/06/2011 for the course FIN 355 taught by Professor Phsiao during the Spring '08 term at S.F. State.

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FIN_355_Homework_and_Solutions[1] - FIN 355 Homework...

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