CH 10 Quiz 1. Last year, you purchased a stock at a price of $60.00 a share. Ove
ID: 2714812 • Letter: C
Question
CH 10 Quiz
1.
Last year, you purchased a stock at a price of $60.00 a share. Over the course of the year, you received $2.90 in dividends and inflation averaged 3.4 percent. Today, you sold your shares for $65.60 a share. What is your approximate real rate of return on this investment?
12.7 percent
5.9 percent
17.6 percent
14.2 percent
10.8 percent
2.
A stock had returns of 9 percent, –7 percent, 5 percent, and 14 percent over the past 4 years. What is the standard deviation of this stock for the past four years?
3.
A stock has returns of 7 percent, 13 percent, 25 percent, and 18 percent for the past 4 years. Based on this information, what is the 95 percent probability range for any one given year?
Last year, you purchased a stock at a price of $60.00 a share. Over the course of the year, you received $2.90 in dividends and inflation averaged 3.4 percent. Today, you sold your shares for $65.60 a share. What is your approximate real rate of return on this investment?
Explanation / Answer
1)
Nominal return over past year:
= ($65.60+$2.90-$60)÷$60
= 14.17%
Nominal rate = Real rate+Inflation rate
14.17% = Real rate+3.4%
Real rate of return = 10.8%