Author Question: Gary bought a share of stock for 15.75 that paid a dividend of .45 and sold three months later for ... (Read 225 times)

torybrooks · **on:** Jul 10, 2018

Gary bought a share of stock for 15.75 that paid a dividend of .45 and sold three months later for 18.65. What was his dollar profit or loss and holding period return?

A) 2.90, 18.41
B) 3.35, 21.27
C) -2.90, -18.41
D) .45, 2.86

Question 2

Assume that the financial markets are in equilibrium. Information on three particular stocks is provided in the table below. Find the risk free rate and the expected return on the market portfolio.

Asset Expected Return Beta
A 7.6 0.2
B 12.4 0.8
C 15.6 1.2

A) 5, 14
B) 5, 18
C) 6, 14
D) 6, 18
E) 7, 16

coyin · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: B
Explanation: B) Profit = Ending Value + Distributions - Original Cost
Profit = 18.65 + 0.45 - 15.75 = 3.35.
HPR = = = 21.27.

Answer to Question 2

C