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.