Investment Returns Suppose the value of an investment doubles in a one-year period. In this case,...
Investment Returns Suppose the value of an investment doubles in a one-year period. In this case, the rate of return on this investment over that one-year period is what amount? a. 100 percent even if the gain is not actually realized. b. 200 percent even if the gain is not actually realized. c. 100 percent only if the gain is actually realized. d. 200 percent only if the gain is actually realized.
Homework Answers
Option a, 100 percent even if the gain is not actually realized.
Reason: If the investment doubles then the gain is 100% since the number just multiplies itself.
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Investment Returns Suppose the value of an investment doubles in
a one-year period. In this case,...
4. Calculating Returns (L01) Suppose you bought a 7 percent coupon bond one year ago for...
4. Calculating Returns (L01) Suppose you bought a 7 percent coupon bond one year ago for $970. The bond sells for $940 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? b. What was your total nominal rate of return on this investment over the past year? c. If the inflation rate last year was 3 percent, what was your total real rate of return on this investment?
The following returns were realized on an investment over a 5-year period. Year 1 2 3...
The following returns were realized on an investment over a 5-year period. Year 1 2 3 4 5 Rate of Return 0.10 0.22 0.06 -0.05 0.20 a) Compute the arithmetic mean, and median of the returns. b) Compute the geometric mean. Round to 3 decimal places. c) Which of the three statistics computed in parts (a) and (b) best describes the return over the 5-year periods? Justify your answer with an explanation.
Suppose we have the following Treasury bill returns and inflation rates over an eight year period:...
Suppose we have the following Treasury bill returns and inflation rates over an eight year period: Suppose we have the following Treasury bill returns and inflation rates over an eight year period: Year Treasury Bills Inflation 1 7.70% 9.20% 2 8.46 12.88 3 6.31 7.41 4 5.48 5.24 5 5.89 7.17 6 8.11 9.52 7 11.10 13.84 8 12.70 13.19 a. Calculate the average return for Treasury bills and the average annual inflation rate for this period. (Do not round...
Investment A is an equity (stock) investment in an American company. Returns on this Investment for...
Investment A is an equity (stock) investment in an American company. Returns on this Investment for the past 6 years are detailed in the table below, and Carlo expects the returns of the next 6 years to be the same as the last 6 years. Year Return 1 +80% 2 -50% 3 +70% 4 -50% 5 +40% 6 -5% With respect to Investment A, if the annual returns are each considered to be equally likely to occur, calculate the standard...
P12-4 Calculating Returns (L01) Suppose you bought a 13 percent coupon bond one year ago for...
P12-4 Calculating Returns (L01) Suppose you bought a 13 percent coupon bond one year ago for $970. The bond sells for $1,045 today. Requirement 1: Assuming a $1,000 face value, what was your the past year? al dollar return on this investment over (Click to select) Requirement 2: What was your total rate of return on this inves past year (in percent)? (Click to select) Requirement 3: If the inflation rate last year was 4 percent, what was your total...
Suppose we have the following Treasury bill returns and inflation rates over an eight- year period:...
Suppose we have the following Treasury bill returns and inflation rates over an eight- year period: Year WN Treasury Bills 10.45% 11.36 9.06 8.34 8.88 11.23 14.11 15.97 Inflation 12.55% 16.00 10.29 7.97 10.29 12.77 16.98 16.90 00 O a. Calculate the arithmetic average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Average...
You invest in a stock over a 5-year period. The returns in each of the 5...
You invest in a stock over a 5-year period. The returns in each of the 5 years are: 10%, 1%, -12%, 4%, and 20%. For all questions, answer should be given in terms of %, and rounded to one decimal place. What is the 5-year Holding Period Return (HPR) of your stock investment? (in %, 1 decimal place) What is the arithmetic mean (this is just the normal mean) annual return of the investment? (in %, 1 decimal place) What...
Suppose you bought a 8.4 percent coupon bond one year ago for $907. The bond sells for $946 today. Required: (a) Assumi...
Suppose you bought a 8.4 percent coupon bond one year ago for $907. The bond sells for $946 today. Required: (a) Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Do not include the dollar sign ($).) Total dollar return $ 84 % You've observed the following returns on Staverosky Corporation's stock over the past five years: -28.2 percent, 15.8 percent, 34.6 percent, 3.4 percent, and 22.4 percent. The average inflation...
2. Expected returns Suppose you won the lottery and had two options: (1) receiving $1 million...
2. Expected returns Suppose you won the lottery and had two options: (1) receiving $1 million or (2) a gamble in which you would receive $2 million if a head were flipped but zero is a tail came up. a. What is the expected value of the gamble? b. Would you take the sure $1 million or the gamble? c. If you chose the sure $1 million, would that indicate that you are a risk averter or a risk seeker?...
Year Stock A returns (%) -18 33 1998 1999 2000 2001 2002 Stock B returns (%)...
Year Stock A returns (%) -18 33 1998 1999 2000 2001 2002 Stock B returns (%) -14.5 21.8 30.5 -7.6 26.3 15 -0.50 a) Calculate the average return for each stock during the period 1998 through 2002. (8 marks) b) Assume that someone held a portfolio consisting of 50 percent stock A and 50 percent stock B. What would have been the realized rate of return on the portfolio in each year from 1998 through 2002? What would have been...
4. Calculating Returns (L01) Suppose you bought a 7 percent coupon bond one year ago for $970. The bond sells for $940 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? b. What was your total nominal rate of return on this investment over the past year? c. If the inflation rate last year was 3 percent, what was your total real rate of return on this investment?
P12-4 Calculating Returns (L01) Suppose you bought a 13 percent coupon bond one year ago for $970. The bond sells for $1,045 today. Requirement 1: Assuming a $1,000 face value, what was your the past year? al dollar return on this investment over (Click to select) Requirement 2: What was your total rate of return on this inves past year (in percent)? (Click to select) Requirement 3: If the inflation rate last year was 4 percent, what was your total...
Suppose we have the following Treasury bill returns and inflation rates over an eight- year period: Year WN Treasury Bills 10.45% 11.36 9.06 8.34 8.88 11.23 14.11 15.97 Inflation 12.55% 16.00 10.29 7.97 10.29 12.77 16.98 16.90 00 O a. Calculate the arithmetic average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Average...
You invest in a stock over a 5-year period. The returns in each of the 5 years are: 10%, 1%, -12%, 4%, and 20%. For all questions, answer should be given in terms of %, and rounded to one decimal place. What is the 5-year Holding Period Return (HPR) of your stock investment? (in %, 1 decimal place) What is the arithmetic mean (this is just the normal mean) annual return of the investment? (in %, 1 decimal place) What...
Suppose you bought a 8.4 percent coupon bond one year ago for $907. The bond sells for $946 today. Required: (a) Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Do not include the dollar sign ($).) Total dollar return $ 84 % You've observed the following returns on Staverosky Corporation's stock over the past five years: -28.2 percent, 15.8 percent, 34.6 percent, 3.4 percent, and 22.4 percent. The average inflation...
2. Expected returns Suppose you won the lottery and had two options: (1) receiving $1 million or (2) a gamble in which you would receive $2 million if a head were flipped but zero is a tail came up. a. What is the expected value of the gamble? b. Would you take the sure $1 million or the gamble? c. If you chose the sure $1 million, would that indicate that you are a risk averter or a risk seeker?...
Year Stock A returns (%) -18 33 1998 1999 2000 2001 2002 Stock B returns (%) -14.5 21.8 30.5 -7.6 26.3 15 -0.50 a) Calculate the average return for each stock during the period 1998 through 2002. (8 marks) b) Assume that someone held a portfolio consisting of 50 percent stock A and 50 percent stock B. What would have been the realized rate of return on the portfolio in each year from 1998 through 2002? What would have been...
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