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Unformatted text preview: 2002
2003
2004
2005 46.3%
26.7%
86.9%
23.1%
0.2%
3.2%
27.0%
27.9%
5.1%
11.3% 29.85%
10.25%
70.45%
6.65%
16.25%
19.65%
43.45%
11.45%
21.55%
27.75% 0.0891023 0.0105063 0.4963203 0.0044223 0.0264063 0.0386123 0.1887903 0.0131103 0.0464403 0.0770063 Variance = SUM of (R  R)2 / T  1 = 0.9907165 / 9 = 0.1100796
Standard deviation = Variance = 0.1100796 = 0.3317825
Standard error = Standard Deviation / T = 0.3317825 / 10 = .03318 or 3.32%
95% Confidence Interval = mean return + or  2 standard errors, so
lower bound = .1638  2 × .0332= .101
upper bound = .1638 + 2 × .0332 = .227 C) D) Diff: 3 Topic: 10.3 Historical Returns of Stocks and Bonds Skill: Analytical 11) The geometric average annual return on the S&P 500 from 1996 to 2005 is closest to: A) 9.75% B) 8.75% C) 7.10% D) 8.35% Answer: C
Explanation: A) B) C) Geometric Average = T (1 + R1 )(1 + R2 )....(1 + RT )  1
= D) 10 1.986857  1 = 1.071067  1 = 0.071067 Diff: 3 Topic: 10.3 Historical Returns of Stocks and Bonds Skill: Analytical Use the table for the question(s) below. Consider the following Price and Dividend data for General Motors:
Date
Price ($)
Dividend ($)
December 31, 2004
$40.06
February 9, 2005
$36.80
$0.50 May 7, 2005
$30.41
$0.50 August 10, 2005
$34.86
$0.50 November 8, 2005
$25.86
$0.50 December 30, 2005
$18.86 12) Assume that you purchased General Motors stock at the closing price on December 31, 2004 and sold it at the closing price on December 30, 2005. Calculate your realized...
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This note was uploaded on 05/03/2013 for the course FINANCE 354 taught by Professor Turner during the Fall '12 term at Maryland.
 Fall '12
 Turner
 Finance, Corporate Finance

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