What are the arithmetic and geometric average returns for a stock

jagguarpaw January 20, 2017 0 Comments

Question: 1. what are the arithmetic and geometric average r…

 

1.What are the arithmetic and geometric average returns for a stock with annual returns of 20 percent, 9 percent, –3 percent, and 13 percent? List the arithmetic answer first.

9.42 percent; 9.75 percent

9.75 percent; 9.42 percent

9.75 percent; 11.08 percent

11.08 percent; 9.75 percent

11.08 percent; 9.42 percent

2.

You own a portfolio that has $2,450 invested in Stock A and $3,250 invested in Stock B. If the expected returns on these stocks are 10 percent and 17 percent, respectively, what is the expected return on the portfolio?(Do not round your intermediate calculations.)

13.99%

14.69%

14.27%

13.01%

13.50%

3.

Holdup Bank has an issue of preferred stock with a $10 stated dividend that just sold for $90 per share. What is the bank’s cost of preferred stock?

11.67%

11.11%

10.00%

11.56%

10.67%

4.

Stock in Country Road Industries has a beta of 0.72. The market risk premium is 10 percent, and T-bills are currently yielding 4 percent. The company’s most recent dividend was $1.6 per share, and dividends are expected to grow at a 3.5 percent annual rate indefinitely. If the stock sells for $32 per share, what is your best estimate of the company’s cost of equity? (Do not round your intermediate calculations.)

8.7%

11.2%

8.67%

9.94%

8.32%

5.

The Auto Group has 1,000 bonds outstanding that are selling for $900 each. The company also has 8,900 shares of preferred stock at a market price of $45 each. The common stock is priced at $40 a share and there are 35,000 shares outstanding. What is the weight of the preferred stock as it relates to the firm’s weighted average cost of capital?

7.42 percent

33.33 percent

14.83 percent

51.84 percent

29.66 percent