Information about three securities appears below.
|
|
Beginning-of-year Price
|
End-of-year Price
|
Interest/dividend paid
|
|
Stock 1
|
$ 42.50
|
$ 46.75
|
$ 1.50
|
|
Stock 2
|
$ 1.25
|
$ 1.36
|
$ 0.00
|
|
Bond 1
|
$1,020
|
$1,048
|
$41.00
|
a. Assuming interest and dividends are paid annually, calculate the annual holding period return on each security.
b. During the year, management of Stock 2 spent $10 million, or $0.50 a share, repurchasing 7.7 million of the company's shares. How, if at all, does this information affect calculation of the hold- ing period return on Stock 2?