1. A. $10,000 is invested in a portfolio which is worth $16,500 8.5 years later. What is the 8.5-year HPR? What is the (geometric) average annual rate of return? Round to 3 decimals: xx.yyy% or .xxyyy
2. An investment over 5 years has an HPR of -7.5% in the first year, +7.5% in the second, +3.1% in the third, +1.2% in the fourth year, and +1.8% in the 5th . a) Calculate the average annual compound rate of return over this 5-year holding period. Round to 3 decimals: xx.yyy% or .xxyyy b) What is the simple average of the annual HPRs? c) Suppose you had invested $500 in this investment at the start. What would your investment have been worth at the end of the 2nd year?
3. A portfolio starts out worth $1200. After the first year, it is worth $1320. After the 2 nd, it’s worth $1,359.60. After the 3rd year, it’s valued at $1,393.59. In the 4th year, it earns an HPR of 5.35%. a) What is this portfolio worth at the end of the 4th year? b) What is its average annual rate of return?
4) Overall a certain holding period, a stock falls from $30 to $27.50, and pays a dividend of $1.755. What is its HPR for that period?
5) Calculate the monthly payment you’d make on a mortgage of $550,000 if the (annual) interest rate is 3.875% and the term of the loan is 30 years.