Self-Assessment HW5E (HPR, Annualized holding period return, Effective annual rate on investment)

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Nov 24, 2024

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Question 1 The prices for the White Swan Corporation for the first quarter of the last year are given below. Find the holding period return (percentage return) for February. End of the month | Stock price January 94.02 February 9035 March 108.22 Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box) Your Answer: W )] Answer units W Hide Check my answer (890.35 -894.02) /$94.02 = -0.0390 = -3.90% Question 2 You purchased 100 shares of General Motors stock at a price of $98.99 one year ago. You sold all stocks today for $102.76. During the year, the stock paid dividends of $5.79 per share. What is your holding period return? Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box). Your Answer: Answer units. W Hide Check my answer ($102.76 + $5.79 - $98.99)/ $98.99 = $9.56/$98.99 = 0.0966 = 9.66% Question 3 Sarah purchased 100 shares of General Electric stock at a price of $53.67 three months ago. She sold all stocks today for $67.53. During the year the stock paid dividends of $4.52 per share. What is Sarah's holding period return Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box) Your Answer: 34.25 % Answer units W Hide Check my answer ($67.53 + $4.52 - $53.67) / $53.67 = 0.3425 = 34.25%
Question 4 You purchased 250 shares of General Motors stock at a price of $82.03 two years ago. You sold all stocks today for $78.14. During this period the stock paid dividends of $5.70 per share. What is your annualized holding period return (annual percentage rate)? Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box) Your Answer: 1.10 Answer units. W Hide Check my answer Step 1: Calculate holding period return: (§78.14 +$5.70 - $82.03) /$82.03 = 0.02207 =2.207% Step 2: Calculate annualized holding period return (annual percentage rate): APR = HPR/n In the problem "You purchased shares... two years ago’, so n=2. 2.207% /2 =1.10% Question 5 You purchased 300 shares of General Electric stock at a price of $61.56 four years ago. You sold all stocks today for $69.92. During that period the stock paid dividends of $3.91 per share. What i your annualized holding period return (annual percentage rate)? Round the answers to two decimal places in percentage form. (Write the percentage sign in the “units" box) Your Answer: 4.98 % Answer units. W Hide Check my answer Step 1: Calculate holding period return: (569.92 +$3.91 - $61.56) /$61.56 = 0.1993 =19.93% Step 2: Calculate annualized holding period return (annual percentage rate): APR = HPR/n In the problem “You purchased shares... four years ago”, so n = 4 19.93%/ 4 =4.98%
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Question 8 Tom purchased 100 shares of Dalia Co. stock of at a price of $129.49 four months ago. He sold all stocks today for $125.12. During the year the stock paid dividends of $5.80 per share. What is Tom's effective annual rate? Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box) Your Answer: 3.35 Answer units. W Hide Check my answer Step 1: Calculate holding period return: ($125.12 +$5.80 - $129.49) /$129.49 = 0.01104 = 1.104% Step 2: Calculate effective annual rate: In this problem “Tom purchased shares... four months ago’, so n=4/12 = 0.3333 EAR =[(1+HPR)*(1/n)] -1 =[(1+0.01104))*(1/0.3333)] -1 =[(1+0.01104)*3] -1 =3.35%