Homework #2 FIN 301, Winter 2011 Due by 4pm on February 14 Note: If not otherwise stated, assume…


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Homework #2 FIN 301, Winter 2011 Due by 4pm on February 14 Note: If not otherwise stated, assume… 1 answer below » Homework #2 FIN 301, Winter 2011 Due by 4pm on February 14 Note: If not otherwise stated, assume that: Yield-to-maturity (YTM) is an APR, semi-annually compounded If not given, assume bonds have a face value of $1,000 Coupon bonds make semi-annual coupon payments; however, coupon rates (rC) are annual rates, i.e., bonds make a semi-annual coupon payment of rC /2 Firms make annual dividend payments Stock prices are the present value of all future dividend s and dont include dividends that were just paid out. Use dividend discount models to calculate stock prices. Problem 1 View complete question » Homework #2 FIN 301, Winter 2011 Due by 4pm on February 14 Note: If not otherwise stated, assume that: Yield-to-maturity (YTM) is an APR, semi-annually compounded If not given, assume bonds have a face value of $1,000 Coupon bonds make semi-annual coupon payments; however, coupon rates (rC) are annual rates, i.e., bonds make a semi-annual coupon payment of rC /2 Firms make annual dividend payments Stock prices are the present value of all future dividend s and dont include dividends that were just paid out. Use dividend discount models to calculate stock prices. Problem 1 Document Preview: The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year.
 Company
Shares
Beginning of Year Price
Dividend Per Share
End of Year Price
 US Bank
 
900
 
$
45.20
 
$
2.23
 
$
45.13
 
 Pepsico
 
800
 
 
60.78
 
 
1.50
 
 
64.25
 
 JDS Uniphase
 
1,700
 
 
20.58
 
 
 
 
 
18.36
 
 Duke Energy
 
800
 
 
28.30
 
 
1.43
 
 
34.06
 
What is your portfolio dollar return and percentage return? (Round your answers to 2 decimal places.)
Portfolio Return
 Dollar return
$  
 Percentage return
 %  
Year-to-date, Oracle had earned a -1.40 percent return. During the same time period, Valero Energy earned 7.68 percent and McDonald’s earned 0.44 percent.
 
If you have a portfolio made up of 20 percent Oracle, 30 percent Valero Energy, and 50 percent McDonald’s, what is your portfolio return? (Round your answer to 2 decimal places.)
 Portfolio return
 %  
Consider the following annual returns of Estee Lauder and Lowe’s Companies:
 
Estee Lauder
Lowe’s Companies
 Year 1
 
25.0
%

4.0
%
 Year 2

35.0
 
 
17.7
 
 Year 3
 
19.2
 
 
5.8
 
 Year 4
 
51.5
 
 
55.0
 
 Year 5

18.4
 

25.0
 
 
Compute each stock’s average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.)
 
Estee Lauder
 
Lowe’s Companies
 Average return
 %  
 
 %  
 Standard deviation
 %  
 
 %  
 Coefficient of variation
 
 
 
 
Which stock appears better?
 
Estee Lauder
Lowe’s Companies
Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round your answer to 2 decimal places.)
 
 Economic State
 
Probability
 
Return
 Fast growth
 
0.20
 
30
 %
 Slow growth
 
0.62
 
8
 
 Recession
 
0.18
 
–44
 
 Expected return
 % Attachments: Finance.docx View less » Jul 29 2015 12:37 PM

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