You have observed the following returns on ABC’s stocks over the last five years Answer

You have observed the following returns on ABC’s stocks over the last five years Answer

1)You have observed the following returns on ABC’s stocks over the last five years: 3.8%, 9.4%, 12.4%, 10.3%, 2.7%

What is the arithmetic average returns on the stock over this five-year period.

2)You have observed the following returns on ABC’s stocks over the last five years: 3.4%, 9.1%, -3.4%, 12.8%, -4.4%

What is the geometric average returns on the stock over this five-year period.

3)You have observed the following returns on ABC’s stocks over the last five years: 2.4%, 8.8%, -8.4%, 10%, -4.8%

What is the arithmetic average returns on the stock over this five-year period.

4)You have observed the following returns on ABC’s stocks over the last five years: 4.9%, 9.1%, 10.3%, 11.8%, 7.6%

What is the geometric average returns on the stock over this five-year period.

5)Suppose the returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.

Compute the standard deviation of the returns.

10)You paid $804 for a corporate bond that has a 10.65% coupon rate. What is the current yield? Hint: if nothing is mentioned, then assume par value = $1,000

11)ABC has issued a bond with the following characteristics: Par: $1,000; Time to maturity: 17 years; Coupon rate: 5%;

Assume annual coupon payments. Calculate the price of this bond if the YTM is 11.94%

12)The 12.35 percent coupon bonds of the Peterson Co. are selling for $892.32. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.

Enter your answer in percentages rounded off to two decimal points.

13)Assume that you wish to purchase a 12-year bond that has a maturity value of $1,000 and a coupon interest rate of 11%, paid semiannually. If you require a 7.6% rate of return on this investment (YTM), what is the maximum price that you should be willing to pay for this bond? That is, solve for PV.

14)The 4.74 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $1,029.19. What is the current yield?

19)ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 8 years; Coupon rate: 4%;

Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 7.9%

26)ABC wants to issue 11-year, zero coupon bonds that yield 7.79 percent. What price should they charge for these bonds if they have a par value of $1,000? That is, solve for PV. Assume annual compounding.

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