Average returns

You have had the following returns over the last 4 years: 5%, -10%, 10%, 15%. What are your arithmetic and geometric average returns? What is the difference?

DGM

You are studying a dividend paying company, and they just paid a dividend of $2. You expect it to grow at 3% per year. If the stock is currently priced at $25, what is the required return on equity?

Bond

You own a bond, currently priced at $957. The coupon rate is 5%, and it matures in 15 years. What is the YTM?

Stock return

You bought a stock at a price of $45.50 per share. It paid a dividend of $1.05 per share during the year and had a price at the end of the year of $52.55 per share. T-Bills currently earn 6.75%. a) What is the stocks dividend yield? What is its the capital gain/loss yield? What is your total percentage rate of return on this investment over the past year.

DGM/CAPM

5. Stock in CDB Industries has a beta of 1.15. The market risk premium is 8 percent, and T-bills are currently yielding 4 percent. CDBs most recent dividend was $1.80 per share, and dividends are expected to grow at a 5 percent annual rate indefinitely. If the stock sells for $34 per share, what is your best estimate of CDBs cost of equity?