1. Suppose a stock had an initial price of $80 per share, paid a dividend of $.60 per share during the year, and had an ending share price of $88. What was the dividend yield and the capital gains yield? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Dividend yield %
Capital gains yield %
2. You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 3 percent, -12 percent, 29 percent, 16 percent, and 15 percent.
a) What was the arithmetic average return on Crash-n-Burn’s stock over this five year period?
b) What was the variance of Crash-n-Burn’s returns over this period? (Do not round intermediate calculations.)
c) What was the standard deviation of Crash-n-Burn’s returns over this period? (Do not round intermediate calculations.)
3. A portfolio has 75 shares of Stock A that sell for $34 per share and 125 shares of Stock B that sell for $20 per share.
a) What is the portfolio weight of Stock A?
b) What is the portfolio weight of Stock B?
4. You own a portfolio that has $1,500 invested in Stock A and $3,800 invested in Stock B. If the expected returns on these stocks are 9 percent and 14 percent, respectively, what is the expected return on the portfolio?(Do not round your intermediate calculations.)
5. You have $25,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 16 percent and Stock Y with an expected return of 8 percent.
a) If your goal is to create a portfolio with an expected return of 10 percent, how much money will you invest in Stock X?
b) If your goal is to create a portfolio with an expected return of 10 percent, how much money will you invest in Stock Y?