a) You buy a stock for $25 and sell it 4 months later for $24. If your
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Question:
a) You buy a stock for $25 and sell it 4 months later for $24. If your HPR (holding period return) was 2%, what is the dividend amount must you have received while holding the stock?
b) A stock price is currently $20 and is expected to be $30 in 2 years. What is its expected annual rate of return?
c) If investors become more risk-averse, what should happen to asset prices? Why?
d) If the risk-free rate rf is the rate of return on a riskless asset, why isn’t rf equal to zero?
e) Define the term investment. One reason an individual might choose to invest is to make a profit. Give two other reasons, as discussed in class, individuals might choose to invest.
Expert Answer:
a Dividend of 150 Must be received to get a Holding Period return of 2 Working Holding Period Return ... View the full answer
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