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##### finanace homework

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**Question**

1.)Chase Bank pays an annual dividend of $1.12 per share on its common stock. One year ago, this stock sold for $51.50 per share. Today, the stock is priced to sell at $31.70 a share. What is the capital gains yield? 2.)A stock produced the following returns over the past 5 years: 17 percent, 5 percent, -13 percent, 25 percent, and 12 percent. What is the arithmetic average risk premium for this stock if the average risk-free rate for the period was 5.1 percent? 3.)Assume that for a 5-year period, large-company stocks had annual rates of return of 30.54 percent, -11.00 percent, -13.79 percent, -12.60 percent, and 38.39 percent. What is the variance of these returns? 4.)A stock produced annual rates of return of 12.2 percent, -15.8 percent, 14 percent, and 16.4 percent over the past 4 years, respectively. What is the geometric average return for this period? 5.)The stock of Blue Water Tours, Inc. is expected to return 23.00 percent in a boom economy, 18.00 percent in a normal economy, and lose 17.00 percent in a recessionary economy. What is the expected rate of return on this stock if there is a 10.00 percent chance the economy booms, and an 86.00 percent chance the economy will be normal? 6.)A stock is expected to earn 47 percent in a boom economy and 23 percent in a normal economy. There is a 36 percent chance the economy will boom and a 64.0 percent chance the economy will be normal. What is the standard deviation of these returns? 7.)A stock is expected to earn 31 percent in a boom economy, 17.50 percent in a normal economy, and lose 35 percent in a recessionary economy. There is a 11 percent chance the economy will boom and a 72 percent chance the economy will be normal. What is the expected risk premium for this stock if the risk-free rate is expected to be 4.90 percent? 8.) Lester has a portfolio comprised of the following stocks: Stock Number of Shares Price per Share Price per Share Price per Share A 620 $ 17 B 400 36 C 840 46 D 560 23 What is the portfolio weight of Stock C? 9.) A portfolio consists of 34 percent Stock A, 53 percent Stock B, and 13 percent Stock C. What is the portfolio expected return given the following: State of Economy Probability of State of Economy Stock A Returns Stock B Returns Stock C Returns Normal 0.80 26% 19% 46% Recession 0.20 %u20132 39 %u201324 10.) What is the standard deviation of a portfolio that is invested 79 percent in Stock A and 21 percent in Stock B given the following information: State of Economy Probability of State of Economy Stock A Returns Stock B Returns Boom 0.34 45% %u20134% Normal 0.66 21.50 66 11.) A portfolio is comprised of the following stocks. What is the portfolio beta? Stock Market Value of Shares Market Value of Shares Market Value of Shares Beta A $ 17,000 1.94 B $ 19,000 1.04 C $ 9,200 1.19 Jan 17 2014 07:51 PM

Solution ID:608862 | This paper was updated on 26-Nov-2015

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