ch 9 - risk and return
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Old price 83New price 91Dividend 1.4
Return 0.113253
1) Return = ((New price-Old price)+Dividend)/ Old pri
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Old price 83New price 91Dividend 1.4
Dividend yield 0.016867
Capital gains yield 0.096386
1) Dividend Yield = Dividend / Old Price
2) Capital gains yield = (New price-Old price)/ Old
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price
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Old price 83New price 76Dividend 1.4
Return -0.06747
Dividend yield 0.016867
Capital gains yield -0.08434
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Return 44
% Return 0.039286
Real return 0.009015
1) Absolute Return = Market price - cost price + int
2) % Return = Interest received / cost price
3) Fisher's equation : (1 + R) = (1 + r)(1 + h)real return = % return / inflation -1
where,h = inflationR = % return
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rest received
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% return of US govt bonds 1.058% return of US corporate bonds 1.062Inflation rate 1.031
Real return of GB 0.026188Real return of CB 0.030068
1) Data not given intaken from the inter
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ook. Data shown in master solutions PDF apparentlynet.
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Year X Y1 0.11 0.362 0.06 -0.073 -0.08 0.214 0.28 -0.125 0.13 0.43
Average Returns 0.1 0.162Variance 0.01685 0.06167Standard Deviation 0.129808 0.248334
1) Note: Unlike what Aarti said, VAanswer in this case.
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R.P and VAR.S, and STDEV.P and STDEV.S did not yield the same
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Year Large co. stock returns T-bill returns Risk Premium1973 -0.1469 0.0729 -0.21981974 -0.2647 0.0799 -0.34461975 0.3723 0.0587 0.31361976 0.2393 0.0507 0.18861977 -0.0716 0.0545 -0.1261
1978 0.0657 0.0764 -0.0107
Returns 0.03235 0.06552 -0.03317Standard Deviation 0.241114659 0.012387157 0.249155234
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New price 163.508
Return 0.073098 1) Assumed to be a deep-discount bond of facev
2) New price = Face value/rate^no. of years
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ue Rs.1000.
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Return 0.0136711) Return = (Market price - cost pric
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+ dividend) / cost price
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Return 0.087192755
APR (Annual Precentage Rate) 0.348771022
EAR (Effective Annual Rate) 0.397095839
1) APR is simple interes
2) EAR is compound int
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t rate.
erest rate.
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Blume's Formula
R5 0.125103R10 0.121483R20 0.114241
1) Blume's Formula:
((Number of years - 1)/Number of years' data-1 )*of years' data- Number of years)/ Number of year
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Rate 1 + ((Numbers' data-1* Rate 2
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New price:
PV of yearly interest payments 381.32PV of principal on maturity 666.34222New price 1,047.67
Return 0.0964
Real return 0.0461999
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