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Information about three securities appear below.

Beginning-of-year Price End-of-year Price Interest/dividend paid

Stock 1 $ 42.50 $ 46.75 $ 1.50

Stock 2 $ 1.25 $ 1.38 $ 0.00

Bond 1 $1,020 $1,048 $41.00

a. Assuming interest and dividends are paid annually, calculate the annual holding period return on each security.

b. During the year, management of Stock 2 spent $10 million, or $0.50 a share, repurchasing 7.7 million of the company