FIN 320 Final Exam - Questions with 100% Correct Answers

FIN 320 Final Exam - Questions with 100% Correct Answers You purchased a stock at a price of $42.90. The stock paid a dividend of $1.59 per share and the stock price at the end of the year is $48.55. What is the capital gains yield? Capital gains yield = ($48.55 - 42.90)/$42.90 Capital gains yield = .1317, or 13.17% Suppose a stock had an initial price of $91 per share, paid a dividend of $1.80 per share during the year, and had an ending share price of $108. a. Compute the percentage total return. b. What was the dividend yield? c. What was the capital gains yield? R = [($108 - 91) + 1.80]/$91 R = .2066, or 20.66% Dividend yield = $1.80/$91 Dividend yield = .0198, or 1.98% Capital gains yield = ($108 - 91)/$91 Capital gains yield = .1868, or 18.68% A stock had returns of 18.58 percent, −5.58 percent, and 20.81 percent for the past three years. What is the variance of the returns? Average return = (.1858 − .0558 + .2081)/3 Average return = .1127, or 11.27% Variance = 1/2[(.1858 − .1127)2 + (−.0558 − .1127)2 + (.2081 − .1127)2] Variance = .02142 A bond had a price of $946.02 at the beginning of the year and a price of $979.58 at the end of the year. The bond's par value is $1,000 and its coupon rate is 5.1 percent. What was the percentage return on the bond for the year? Bond return = ($979.58 - 946.02 + 51) / $946.02 Bond return = .0894, or 8.94% You purchased a stock at a price of $50.20. The stock paid a dividend of $1.99 per share and the stock price at the end of the year is $56.35. What was the dividend yield? Dividend yield = $1.99/$50.20 Dividend yield = .0396, or 3.96% You purchased GARP stock one year ago at a price of $66.51 per share. Today, you sold your stock and earned a total return of 18.63 percent. The stock paid dividends of $2.76 per share over the year. What was the capital gains yield on your investment? Dividend yield = $2.76/$66.51 Dividend yield = .0415, or 4.15% Capital gains yield = 18.63% - 4.15% Capital gains yield = 14.48% Last year, you purchased 510 shares of Forever, Inc., stock at a price of $45.44 per share. You received $714 in dividends and a total of $25,556 when you sold the stock. What was the capital gains yield on this stock? Capital gains yield = [($25,556/510) − 45.44]/$45.44 Capital gains yield = .1028, or 10.28% You purchased 1,900 shares of Barrett Golf Corp. stock at a price of $37.48 per share. While you owned the stock, you received dividends totaling $.87 per share. Today, you sold your stock at a price of $41.61 per share. What was your total dollar return on the investment? Total dollar return = ($41.61 − 37.48 + .87) × 1,900 Total dollar return = $9,500 You purchased a zero-coupon bond one year ago for $280.83. The market interest rate is now 9 percent. Assume semiannual compounding. If the bond had 15 years to maturity when you originally purchased it, what was your total return for the past year? P1 = $1,000/1.045^28 P1 = $291.57 R = ($291.57 - 280.83)/$280.83 R = .0382, or 3.82% You purchased 330 shares of a particular stock at the beginning of the year at a price of $75.93. The stock paid a dividend of $1.25 per share, and the stock price at the end of the year was $82.44. What was your dollar return on this investment? Dollar return = 330($82.44 - 75.93 + 1.25) Dollar return = $2,560.80 Use the following returns for X and Y X: Year 1 = 22.2%, Year 2 = -17.2, Year 3 = 10.2, Year 4 = 20.4, Year 5 = 5.2 Y: Year 1 = 27.6%, Year 2 = -4.2, Year 3 = 29.6, Year 4 = -15.4, Year 5 = 33.6 a. Calculate the average returns for X and Y. b. Calculate the variances for X and Y. c. Calculate the standard deviations for X and Y. X: (.222 − .172 + .102 + .204 + .052)/5 =.0816, or 8.16% Y: (.276 − .042 + .296 − .154 + .336)/5 =.1424, or 14.24% σx2: (1/5−1){(.222−.0816)^2+(−.172−.0816)^2+(.102−.0816)^2+(.204−.0816)^2+(.052−.0816)^2} =.025075 σy2: (1/5−1){(.276−.1424)^2+(−.042−.1424)^2+(.296−.1424)^2+(−.154−.1424)^2+(.336−.1424)^2} =.050195 σX = .025075^1/2 σX = .1584, or 15.84% σY = .050195^1/2 σY = .2240, or 22.40% You bought a stock three months ago for $83.32 per share. The stock paid no dividends. The current share price is $90.34. What is the APR and EAR of your investment? R = ($90.34 - 83.32)/$83.32 R = .0843, or 8.43% APR = 4(8.43%) APR = 33.70% EAR = (1 + .0843)^4 - 1 EAR = .3820, or 38.20% You've observed the following returns on Yamauchi Corporation's stock over the past five years: -24.9 percent, 13.6 percent, 30.2 percent, 2.3 percent, and 21.3 percent. a. What was the arithmetic average return on the stock over this five-year period? b. What was the variance of the returns over this period? c. What was the standard deviation of the returns over this period? Arithmetic average return = (-.249 + .136 + .302 + .023 + .213)/5 Arithmetic average return = .0850, or 8.50% Variance = 1/4[(-.249 - .0850)^2 + (.136 - .0850)^2 + (.302 - .0850)^2 + (.023 - .0850)^2 + (.213 - .0850)^2] Variance = .045369 Standard deviation = .045369^1/2 Standard deviation = .2130, or 21.30% A stock had returns of 17.75 percent, −11.68 percent, 23.60 percent, and 13.71 percent for the past four years. What is the standard deviation of the returns? Average return = (.1775 − .1168 + .2360 + .1371)/4 Average return = .1085, or 10.85% Variance = 1/3[(.1775 − .1085)^2 + (−.1168 − .1085)^2 + (.2360 − .1085)^2 + (.1371 − .1085)^2] Variance = .02420 Standard deviation = .02420^1/2 Standard deviation = .1556, or 15.56% You purchased 300 shares of stock at a price of $39.12 per share. Over the last year, you have received total dividend income of $330. What is the dividend yield? Dividend yield = ($330/300)/$39.12 Dividend yield = .028, or 2.8% One year ago, you purchased a stock at a price of $57.45 per share. Today, you sold your stock at a loss of 18.15 percent. Your capital loss was $12.32 per share. What was the dividend yield on this stock? Dividend yield = −.1815 − (−$12.32/$57.45) Dividend yield = .0329, or 3.29%