Problem 1. Calculating Returns. Suppose a stock had an initial price of $84 per share, paid a dividend of $1.40 per share during the year, and had an ending share price of $96. Compute the percentage of total return.
Problem 2. Holding Period Returns. A stock has had returns of -17.62 percent, 15.38 percent, 10.95 percent, 26.83 percent, and 5.31% over the past five years, respectively. What was the holding period return for the stock?
Problem 3. Calculating Returns. You bought a share of 5.5 percent preferred stock for $92.73 last year. The market price for the stock is now $95.89. What is your total return for last year?
Problem 4. Calculating Returns. You bought a stock three months ago for $32.81 per share. The stock paid no dividends. The current share price is $37.53. What is the APR of your investment? The EAR?
Problem 5. Portfolio Expected Returns. You own a portfolio that has $3,400 invested in Stock A and $4,100 invested in Stock B. If the expected returns on these stocks are 9.5 percent and 15.2 percent, respectively, what is the expected return on the portfolio?
Problem 6. Using CAPM. A stock has a beta of 1.25, the expected return on the market is 11.5 percent, and the risk-free rate is 3.4 percent. What must the expected return on this stock be?
Problem 7. Calculating cost of equity. The XOXO Corporation's common stock has a beta of 1.15. If the risk-free rate is 4.5 percent and the expected return on the market is 11 percent, what is XOXO's cost of equity capital?
Problem 8. Calculating WACC. Libby Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its cost of equity is 15 percent, and the cost of debt is 8 percent. The relevant tax rate is 35%. What is Libby's WACC?