1. Suppose a stock had an initial price of P72 per share, paid a dividend of P1.

65 per
share during the year, and had an ending share price of P85. Compute the
percentage total return. What was the dividend yield? The capital gains yield?

2. Rework Problem 1 assuming the ending share price is P62.

3. You purchased 250 shares of a particular stock at the beginning of the year at a
price of P87.25. The stock paid a dividend of P1.15 per share, and the stock price at
the end of the year was P94.86. What was the peso return on this investment?

4. Suppose you bought a bond with an annual coupon rate of 6.5 percent one year ago
for P1,032. The bond sells for P1,020 today.
a. Assuming a P1,000 face value, what was your total peso return on this
investment over the past year?
b. What was your total nominal rate of return on this investment over the past year?
c. If the inflation rate last year was 3 percent, what was your total real rate of return
on this investment?

5. Using the following returns, calculate the average returns, the variances, and the
standard deviations for X and Y.
YEAR RETURNS
X Y
1 16% 36%
2 (17% ( 8%)
)
3 13% 21%
4 15% (15%)
5 24% 39%

6. You’ve observed the following returns on Barnett Corporation’s stock over the past
five years: (12) percent; 23 percent, 18 percent, 7 percent and 13 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? The standard deviation?

7. For problem 6, suppose the average inflation rate over this period was 3.2 percent,
and the average T-bill rate over the period was 4.3 percent.
a. What was the average real return on the stock?
b. What was the average nominal risk premium on the stock?

8. Given the information in Problem 7, what was the average real risk-free rate over
this time period? What was the average real risk premium?
9. You purchased a zero-coupon bond one year ago for P352.81. The market interest
rate is now 5.4 percent. If the bond had 20 years to maturity when you originally
purchased it, what was your total return for the past year? Assume semi-annual
compounding.

10. You bought a share of 5.5 percent preferred stock for P104.18 last year. The market
price for your stock is now P102.67. What is your total return for last year?

11. You bought a stock 3 months ago for P42.67 per share. The stock paid no
dividends. The current price if P45.38. What is the APR of your investment? The
EAR?

12. A stock has had returns of (23) percent, 9 percent, 37 percent, (8) percent and 19
percent over the last six years. What are the arithmetic and geometric returns for the
stock?