Fin 8
A review of Chapter 10 would help with these problems as indicated above.
1. You bought a stock for $28.29 that paid the following
Dividends
| Year | 1 | 2 | 3 |
| Dividend | $1.00 | $1.50 | $1.80 |
After the third year, you sold the stock for $35. What was the annualized rate of return?
Hint use Financials in Excel: =IRR(A6:A9) or your Financial Calculator
ANS: ————————————————————————————————————————————————————-
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2. a. Given the following information concerning three stocks, construct a simple average, a value-weighted average, and a geometric average.
| Stock | Price | Shares Outstanding |
| A | $10 | 1,000,000 |
| B | $14 | 3,000,000 |
| C | $21 | 10,000,000 |
b. What are averages if each price rises to $11, $17, and $35, respectively?
c. What is the percentage increase in each average?
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ANSWERS:
a.——————————————————
b. —————————————————-
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