Q$3)$ Holding Period Return $($HPR$)$

a$)$ You purchase stock at $P_0=$$$7\mathrm{.}50.$ The expected future dividend and price in one$-$year are $D_1=$

$$1\mathrm{.}10$ and $P_1=$$$8\mathrm{.}15$ respectively. What is the expected holding period return?

b$)$ A company just paid a dividend of $D_0=$$$2\mathrm{.}05.$ The dividend is expected to grow at a rate $g=$

$3\mathrm{.}5\%.$ The company has a discount rate $($market capitalization rate$)$ of $k=10\mathrm{.}5\%.$ 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{.}20.$ The dividend is expected to grow at an

annual rate of $g=5\%$ for the first three years $($e$.$g$.,t=1$ to $t=3).$ If the price in year $t=3$ is $P_3=$

$$80\mathrm{.}50$ and the market capitalization rate of the company is $k=6\%$ what is the current

intrinsic value of the stock $P_0?$