Question

1) (2 pts) a) Jan. 1, 2014, the DJIA was at 15,300. On Jan. 1, 2019, the DJIA is at 23,800. What was the geometric average annual rate of return over the last 5 years? 13.5% Stock BB currently sells for $49 per share and is expected to pay a $1.00 dividend over nths and sell for $53 in 9 months. What is the expected periodic return over the 2) 2 pts) t 9 months ? What is the expected nominal rate of return (Annual Percentage Rate) for Stock nex BB? Expected Periodic Rate of Return% Expected Nominal Rate of Return (APR)- % - % (2 pts) Stock CC currently sells for $42 a share and is expected to pay $1.00 dividend one year from now and $1.80 dividend two years from now and $2.10 dividend three years from now. Stock CC is expected to sell for $69 per share in three years. What is the expected rate of return for Stock CC? 3) Expected rate of return for Stock CC 8.9

Answer 1

Answer:

Question 1)

1st January 2014 DJIA P=15300

1st January 2019 DJIA A=23800

n=5 years

Let Geometric average annual rate= r

So A=P*(1+r/100)^n

23800=15300*(1+r/100)^5

(1+r/100)^5=1.56

r=9.30%