Q$1)$ Holding Period Return $($HPR$)$

a$)$ You purchase stock at $P_0=$$$10\mathrm{.}00.$ The expected future dividend and price in one$-$year are

$D_1=$$$1\mathrm{.}50$ and $P_1=$$$11\mathrm{.}50$ respectively. What is the expected holding period return?

b$)$ A company just paid a dividend of $D_0=$$$2\mathrm{.}00.$ The dividend is expected to grow at a rate $g=$

$3\%.$ The company has a discount rate $($market capitalization rate$)$ of $k=8\%.$ In one year you

sell the stock at its intrinsic value. What is your holding period return?

c$)$ A company just paid an annual dividend of $D_0=$$$2\mathrm{.}50.$ The dividend is expected to grow at an

annual rate of $g=3\%.$ If the intrinsic price in year $t=3$ is $P_3=$$$50\mathrm{.}00$ and the market

capitalization rate of the company is $k=8\%$ what is the current intrinsic value of the stock $P_0?$