Total Marks: 80 Problem #115 marks) A stock had the following prices and dividends. What is the geometric average return on this stock? Year 2017 2016 2015 2014 Price (end) Dividend $24.08 $22.26 $22.90 522.57 $.33 $.31 $.30 $.29 Problem #2 (6 marks) A stock had returns of 5%, 16%,-18%, and 11% for the is the 95% probability range for any one given year? past four years. Based on this information what Problem 3 (4 marks Given $100,000 to invest, what is the expected risk premium, in dollars, of investing in equities versus T-bills based on the following information Action Invest in Equities Probability 0.55 0.45 Expected Return (in $'s) $50,000 $30,000 $5,000 Invest in risk-free T-bills 1.0 Problem 4 (23 marks) Consider the following probability distribution for stocks A and B: StateProbability Return on Stock A 0.10 0.20 0.20 0.30 10% 13% 12% 14% 15% Return on Stock B 8% 796 6% 9% 8% Stock A has a correlation with the market portfolio of 0.75 and stock B has a correlation with the market portfolio of 0.3. The market portfolio has a standard deviation of 12%. The risk free rate is equal to 2.5%. a) Calculate the expected return of stock A and Stock B b) Calculate the standard deviation of stock A and stock B. c) Calculate the coefficient of correlation between Stock A and Stock B d) If you invest 40% of your money in A and 60% in B, what would be the expected rate of return and standard deviation your portfolio? one new Shares 13-S