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?
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
Section: Chapter Questions
Problem 1PS
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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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8b09a0d0-2885-487d-990f-0656ed257748%2Faa6a5845-7e1f-4aa6-9de5-a19fa0289b25%2Fr9zsp68_processed.png&w=3840&q=75)
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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8b09a0d0-2885-487d-990f-0656ed257748%2Faa6a5845-7e1f-4aa6-9de5-a19fa0289b25%2Ftal1wv6_processed.png&w=3840&q=75)
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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