ZuoTi.Pro
Question

QUE// Calculate a one-year holding period return for the following two investments alternatives. Which investment would...

QUE// Calculate a one-year holding period return for the following two investments alternatives.

Which investment would you prefer, assuming they are of equal risk? Explain.

            Investment  

X                                 Y

Cash received

1st quarter                                                                                             $1.00                           $0.00

2nd quarter                                                                                            $1.20                           $0.00

3rd quarter                                                                                            $0.00                           $0.00

4th quarter                                                                                            $2.30                           $2.00

Investment value

Beginning of Year                                                                                $30.00                         $50.00

End of year                                                                                          $29.00                         $56.00

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Holding period return formula is (HPR) = (Income+ (end of period value-original value))/original value) 100 For InvestmentX: Income is Income received in all the four quarters 1.00+1.20+0.00+2.30 S4.50/ Holding period return (HPR)((4.50 (29-30)/30) 100 Holding period return (HPR)-11.67% Approx. For InvestmentY: Income is Income received in all the four quarters S 2.00/ Holding period return (HPR) ((2.00+(56-50))/50) 100 Holding period return (HPR)-16.00% Approx. Assuming they are of equal risk, Investment Y provides more return than Investment X So Investment Y is preffered.

0 0
Add a comment
Know the answer?
Add Answer to:
QUE// Calculate a one-year holding period return for the following two investments alternatives. Which investment would...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Calculate a one-year holding period return for the following two investments alternatives. Which investment would you...

    Calculate a one-year holding period return for the following two investments alternatives. Which investment would you prefer, assuming they are of equal risk? Explain.             Investment   X                                 Y Cash received 1st quarter                                                                                             $1.00                           $0.00 2nd quarter                                                                                            $1.20                           $0.00 3rd quarter                                                                                            $0.00                           $0.00 4th quarter                                                                                            $2.30                           $2.00 Investment value Beginning of Year                                                                                $30.00                         $50.00 End of year                                                                                          $29.00                         $56.00

  • Question #7: Holding Period Return (20 Points) Assume that you have a one-year investment horizon and...

    Question #7: Holding Period Return (20 Points) Assume that you have a one-year investment horizon and are trying to choose among two bonds. Both have the same default risk and mature in 6 years. The first is a zero-coupon bond that pays $1000 at maturity. The second is a $1000 par value coupon bond that has a coupon rate of 6% and makes an annual coupon payment. (a) If the YTM is equal to 3.6% what is the current prices...

  • Here is the text book information, trend needs to be return on investment Calculate one financial...

    Here is the text book information, trend needs to be return on investment Calculate one financial statement ratio trend within your industry that warrants improvement efforts. Make up your own. Return on Investment LO 2 Explain the importance and show the calculation of return on investment. Imagine that you are presented with two investment alternatives. Each investment will be made for one year, and each investment is equally risky. At the end of the year you will get your original...

  • The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began...

    The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Exhibit 16-6. XYZ corp. Book Income Income statement For current year Revenue from sales $ 40,000,000 Cost of Goods Sold (27,000,000 ) Gross profit $ 13,000,000 Other income: Income from investment in corporate stock 300,000 1 Interest income...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT