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Calculate the expected returns

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Reference no: EM131115306

1. Suppose the nominal rate is 12.5% and the inflation rate is 4.55%. Solve for the real rate. Use the Fisher Effect formula.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

2. Calculate the expected returns of your portfolio

Stock

Invest

Exp Ret

A

$446

8.2%

B

$996

18.3%

C

$1,220

21.5%

3. Suppose a stock had an initial price of $70.22 per share, paid a dividend of $6.9 per share during the year, and had an ending share price of $97.9. What are the dollar returns?

4. Suppose a stock had an initial price of $78.98 per share, paid a dividend of $5.3 per share during the year, and had an ending share price of $83.29. What are the percentage returns?

5. Suppose a stock had an initial price of $65.57 per share, paid a dividend of $5.5 per share during the year, and had an ending share price of $109.92. What are the percentage returns if you own 25 shares?

6. Suppose a stock had an initial price of $65.43 per share, paid a dividend of $8.3 per share during the year, and had an ending share price of $108.54. If you own 45 shares, what are the dollar returns?

Stock

Invest

Exp Ret

A

$246

3.7%

B

$936

12.3%

C

$334

27.3%

7. Calculate the expected returns of your portfolio

8. You own a portfolio invested 16.52% in Stock A, 17.65% in Stock B, 26.85% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.68, 1.49, 0.3, and 1.43. What is the portfolio beta?

9. A portfolio is invested 46.5% in Stock A, 24.3% in Stock B, and the remainder in Stock C. The expected returns are 15.5%, 21.7%, and 20.7% respectively. What is the portfolio's expected returns?

10. Suppose a stock had an initial price of $74.98 per share, paid a dividend of $4.9 per share during the year, and had an ending share price of $107.19. What are the percentage returns?

11. You own a portfolio invested 28.98% in Stock A, 16.72% in Stock B, 24.1% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.42, 1.07, 0.96, and 1.05. What is the portfolio beta?

12. Based on the following information, calculate the expected returns:

Prob

Return

Recession

30%

33.1%

Boom

70%

3.1%

Reference no: EM131115306

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