Finance: You have observed the following returns on ABC’s stocks

Finance: You have observed the following returns on ABC’s stocks over

Subject: Business    / Finance
Question

QUESTION 1

You have observed the following returns on ABC’s stocks over the last five years:

4.9%, 9.8%, -9%, 11.2%, -4.8%

What is the arithmetic average returns on the stock over this five-year period.

QUESTION 2

A portfolio is invested 43.8% in Stock A, 29.8% in Stock B, and the remainder in Stock C. The expected returns are 10.7%, 27.4%, and 18.5% respectively. What is the portfolio’s expected returns?

QUESTION 3

Suppose a stock had an initial price of $71.64 per share, paid a dividend of $9.7 per share during the year, and had an ending share price of $92.05. If you own 122 shares, what are the dollar returns?

QUESTION 4

Suppose a stock had an initial price of $84.36 per share, paid a dividend of $5.1 per share during the year, and had an ending share price of $107.65. What are the percentage returns?

QUESTION 5

Suppose the returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.
Compute the standard deviation of the returns.

QUESTION 6

Calculate the expected returns of your portfolio

Stock

Invest

Exp Ret

A

$429

3.7%

B

$812

15.8%

C

$218

29.4%

QUESTION 7

You own a portfolio invested 10.01% in Stock A, 12.65% in Stock B, 13.78% in Stock C, and the remainder in Stock D. The beta of these four stocks are 1.14, 1.15, 0.99, and 0.73. What is the portfolio beta?

QUESTION 8

Suppose a stock had an initial price of $83.94 per share, paid a dividend of $5.2 per share during the year, and had an ending share price of $98.63. What are the dollar returns?

QUESTION 9

Based on the following information, calculate the expected returns:

Prob

Return

Recession

30%

34.4%

Boom

70%

10.4%

QUESTION 10

Suppose a stock had an initial price of $70.16 per share, paid a dividend of $5.1 per share during the year, and had an ending share price of $109.09. What are the percentage returns?

QUESTION 11

You own a portfolio invested 27.54% in Stock A, 13.01% in Stock B, 18.13% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.27, 0.89, 0.66, and 0.8. What is the portfolio beta?

QUESTION 12

Calculate the expected returns of your portfolio

Stock

Invest

Exp Ret

A

$251

7.4%

B

$955

19%

C

$1,265

25.4%

QUESTION 13

Suppose a stock had an initial price of $96.37 per share, paid a dividend of $8.9 per share during the year, and had an ending share price of $93.11. What are the percentage returns if you own 25 shares?

QUESTION 14

Suppose the real rate is 2.25% and the nominal rate is 11.16%. Solve for the inflation rate. Use the Fisher Effect equation.

QUESTION 15

The stock of Billingsley United has a beta of 0.92. The market risk premium is 8.4 percent and the risk-free rate is 3.2 percent. What is the expected return on this stock?

8.87 percent

9.69 percent

10.93 percent

11.52 percent

12.01 percent

QUESTION 16

You own a portfolio of two stocks, A and B. Stock A is valued at $6,540 and has an expected return of 11.2 percent. Stock B has an expected return of 8.1 percent. What is the expected return on the portfolio if the portfolio value is $9,500?

9.58 percent

9.62 percent

9.74 percent

9.97 percent

10.23 percent

QUESTION 17

You own a portfolio that has $1,900 invested in Stock A and $2,700 invested in Stock B. If the expected returns on these stocks are 9 percent and 15 percent, respectively, what is the expected return on the portfolio?

10.57 percent

11.14 percent

11.96 percent

12.52 percent

13.07 percent

QUESTION 18

A $36,000 portfolio is invested in a risk-free security and two stocks. The beta of stock A is 1.29 while the beta of stock B is 0.90. One-half of the portfolio is invested in the risk-free security. How much is invested in stock A if the beta of the portfolio is 0.58?

$6,000

$9,000

$12,000

$15,000

$18,000

QUESTION 19

What is the beta of the following portfolio?

Stock Value Beta

J $21,600 1.48
K 13,000 1.13
l 46,000 .88
M 19,800 1.08

1.08

1.14

1.17

1.21

1.23

QUESTION 20

What is the beta of the following portfolio?

Stock Value Beta

S $32,800 .97
T 16,700 1.26
U 21,100 .79
V 4,600 1.48

0.98

1.02

1.11

1.14

1.20