Describe the steps involved in the investment decision process. Be sure to mention how returns and risks can be evaluated together to determine acceptable investments.
Answer to relevant QuestionsWhat role do historical performance data play in estimating an investment’s expected return? Discuss the key factors affecting investment returns—internal characteristics and external forces. Explain why you must earn 10% on all income received from an investment during its holding period in order for its yield actually to equal the 10% value you’ve calculated. You invest $7,000 in stock and receive $65, $70, $70, and $65 in dividends over the following 4 years. At the end of the 4 years, you sell the stock for $7,900. What was the yield on this investment? A company paid dividends of $1.00 per share in 2006 and just announced that it will pay $2.21 in 2013. Estimate the compound annual growth rate of the dividends. Calculate the holding period return for the following two investment alternatives. Which, if any, of the return components is likely not to be realized if you continue to hold each of the investments beyond 1 year? Which ...
Post your question