You have been asked to determine the effective annual rate of return (realized return) on Stock A over the past 5 years. Stock A had a return of -7.2% in 2020, a return of 11.0% in 2019, a return of 17.1% in 2018, a return of 21.8% in 2017 and a return of 23.6% in 2016. Based on this information what was Stock A's effective annual rate of return (realized return) over this period?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You have been asked to determine the effective annual rate of return (realized return) on Stock
A over the past 5 years. Stock A had a return of -7.2% in 2020, a return of 11.0% in 2019, a
return of 17.1% in 2018, a return of 21.8% in 2017 and a return of 23.6% in 2016. Based on this
information what was Stock A's effective annual rate of return (realized return) over this
period?
ABC stock has an average annual return of 18.2%. The standard deviation of ABC's returns is
26.3%. The market has an average annual return of 12.2%. The standard deviation of the
market's returns is 12.8%. The correlation between ABC stock and the market is 0.3. What is
ABC's beta?
Transcribed Image Text:You have been asked to determine the effective annual rate of return (realized return) on Stock A over the past 5 years. Stock A had a return of -7.2% in 2020, a return of 11.0% in 2019, a return of 17.1% in 2018, a return of 21.8% in 2017 and a return of 23.6% in 2016. Based on this information what was Stock A's effective annual rate of return (realized return) over this period? ABC stock has an average annual return of 18.2%. The standard deviation of ABC's returns is 26.3%. The market has an average annual return of 12.2%. The standard deviation of the market's returns is 12.8%. The correlation between ABC stock and the market is 0.3. What is ABC's beta?
ABC Inc. is expected to pay a dividend of $1.01 at the end of the year (year 1). The stock has a
beta of 1.64. The risk-free rate is 2.9%. The expected return on the market is 7.2%. The stock's
dividends are expected to grow at a constant rate. The stock price today is $30.66. If the market
is in equilibrium what does the market believe the stock price will be in 3 years?
ABC Inc has an outstanding preferred share. The preferred share just paid a dividend of $0.99.
Dividends are paid quarterly. The price of stock today is $52.18. What is the effective annual
rate of return?
Transcribed Image Text:ABC Inc. is expected to pay a dividend of $1.01 at the end of the year (year 1). The stock has a beta of 1.64. The risk-free rate is 2.9%. The expected return on the market is 7.2%. The stock's dividends are expected to grow at a constant rate. The stock price today is $30.66. If the market is in equilibrium what does the market believe the stock price will be in 3 years? ABC Inc has an outstanding preferred share. The preferred share just paid a dividend of $0.99. Dividends are paid quarterly. The price of stock today is $52.18. What is the effective annual rate of return?
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