Please help me solve the following: your assessment of the relative riskiness of
ID: 2727881 • Letter: P
Question
Please help me solve the following:
your assessment of the relative riskiness of the Google investment (analyzed in the previous problem) compared to investing in the S&P; index (recall from Chapter 2 that you can purchase mutual funds that mimic the returns to the index)? (Calculating rates of return) The common stock of Placo Enterprises had a market price of $12 on the day you purchased it just one year ago. During the past year the stock had paid a $1 dividend and closed at a price of $14. What rate of return did you earn on your investment in Placo's stock?Explanation / Answer
Rate of return = (Dividend income + Increase in share price) / Purchase price x 100
= [1+ (14-12)] / 12 x 100
= 25%