MGF301 Assignment 3

# MGF301 Assignment 3 - 1. You purchased 1,000 shares of...

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1. You purchased 1,000 shares of stock for \$35 per share exactly one year ago. During the year, the stock paid a \$.70 dividend per share and the current stock price is \$24 per share. The inflation rate the last year was 3%. Answer the following (showing all work): (a) Calculate the actual return (also called percentage return) on your investment over the last year. (b) Calculate (i) the dividend yield and (ii) the percentage capital gain . (c) Calculate the real rate of return on the stock. (a) Percentage Return = (24-35+.7) / 35 = -29.4% (b) i. Dividend Yield = .7 / 35 = 2% ii. Percentage Capital Gain = (24-35)/35 = -31.4% (c) 1.294/1.07 = 1.2093 -1 = .2093 = 20.93% 4. Find an announcement of new information made within a month from today (i.e., earnings announcement, merger, etc.) for any publicly traded stock that moves the stock price at least 1%. Print out or draw a chart that shows at least 2 days before the event and at least one day after . [Note: make sure you find the first announcement of the information. ] (a) Using this chart, analyze if the evidence is consistent with the semi-strong form market efficiency. (b) Is the stock market reaction consistent with the strong form of market efficiency? Jan. 22, 2008, 6:43 p.m. EST

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## This note was uploaded on 04/01/2012 for the course MGF 301 taught by Professor Mohr during the Spring '08 term at SUNY Buffalo.

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MGF301 Assignment 3 - 1. You purchased 1,000 shares of...

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