Part 2 (ch10) Questions Numeric

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For students

Last updated: 17/02/2025

Type your answers with “.” instead of “,”! For numerical answers, use 2 decimal places. For instance, if your answer is 0.12345 or 12.345%, type, “12.34” in the box.

Question 1

Q: You bought a stock one year ago for 9.944 per share and sold it today for 7.462. It paid a 1.077 per share dividend today.

What was your realized return?

How much of the return came from dividend yield and how much came from capital gain?

  • Dividend Yield:

  • Capital gain:

Answer:

1) -14.132. 2) 10.832. 3) -24.964


Question 2

Q: Suppose the market risk premium is 8 and the risk-free interest rate is 5.001. Calculate the cost of capital of investing in a project with a beta of 0.813?

Answer:

1) 11.503


Question 3

Q: You bought a stock for 51.65 per share and sold it later for 67.47. It paid 1.56 in dividends over the period.

What was your holding period return in percentage terms?

Answer:

1) 33.66


Question 4

Q: You bought a stock for 120.23 per share and sold it for 115.89 after 4 years. You received 1.14 in dividends per year.

What was your total return over the period?

What was your annualized return (CAGR)?

Answer:

1) 0.17. 2) 0.04


Question 5

Q: The past five annual returns of a stock were (in %): 7.01, 10.71, 2.52, 4.22, 11.74

What was the average return?

What was the standard deviation of the returns?

Answer:

1) 7.24. 2) 3.99


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