207 Year Tata Motors 131 22% 9% Infosys 10% 3% 251mb21381-85127- 2 3 4 -12% 8% for the past 5 years are as given below Based on the above information answer the following questions: (a) Compute the arithmetic mean of the annual rate of return for each stock. Which stock is preferable by this measure? SITE 23/03 (b) Compute the geometric mean of the annual rato 2024950 answerb21381-85127-2023/09/24-2022mb 2023/09/24-2022mb212
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Y2
![Assume that the annual rates of return for two stocks (Tata Motors
e annual rate
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Year Tata Motors Infosys
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3
4
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14%
10%
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able for this question.
for the past 5 years are as given
Based on the above information answer the following questions:
(a) Compute the arithmetic mean of the annual rate of return for each stock. Which stock is preferable by this measure?
answer 21381-85127-2023/09/24-2022mb231-8
(c) Compare and contrast Market Risk vs. Credit Risk? [2]
(b) Compute the geometric mean of the annual rate of return for each stock. Which stock is preferable by this measure?
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- Consider a stock whose value increases across an 8-year period as shown in the table. Instructions: Round your answers to two decimal places. a. Calculate the percentage change in the value of the stock from year to year. Percent Change Year 1 2 3 4 5 6 7 8 Stock Value $80.00 92.00 107.00 128.00 145.00 250.00 400.00 670.00 % V b. Calculate the percentage change in the value of the stock across the entire 8-year period. c. Do you think this qualifies as a bubble? & % 4 V N % O Yes, because the percentage change in the stock value is positive every year. O No, because the percentage change in the stock value has not increased. O Yes, because the percentage change in the stock value has increased greatly. O No, because the percentage change in the stock value fluctuates up and down across the 8 years.Your stock's returns for the past four years are as follows. t Return t1 19.79% t2 -0.58% t3 8.55% t4 4.68% Compute the geometric average return for this stock. Please enter your answer as a PERCENT rounded to 2 decimal places.Use the information in the following stock quote to answer the question: As of February 1, 2XX1 Name Symbol Open High Low Close Net Chg Div Yield PE Target TGT 87.01 87.32 86.75 87.05 -0.32 2.56 2.93 16.76 What was Target’s earnings per share over the last year? (Round your answer to 2 decimal places. (e.g., 32.16))
- → W 5 (Related to Checkpoint 7.2) (Calculating the geometric and arithmetic average rate of return) Marsh Inc. had the following end-of-year stock prices over the last five years and paid no cash dividends: Marsh $11 10 20 9 11 (Click on the icon in order to copy its contents into a spreadsheet.) d Time 1 2 3 4 ew an example 5 F2 a. Calculate the annual rate of return for each year from the above information. b. What is the arithmetic average rate of retum earned by investing in Marsh's stock over this period? In a. The annual rate of return at the end of year 2 is -9.09 %. (Round to two decimal places.) The annual rate of return at the end of year 3 The annual rate of return at the end of year 4 is The annual rate of retum at the end of year 5 is b. The arithmetic average rate of return earned by investing in Marsh's stock over this period is%. (Round to two decimal places.) is 100 %. (Round to two decimal places.) -55 %. (Round to two decimal places.) 22.22 %. (Round to two decimal…You have found the following historical information for the Daniela Company: Stock price EPS Year 1 $48.09 2.54 Target price Year 2 $ 64.22 2.60 Year 3 $ 62.94 2.77 Year 4 $65.62 2.76 Earnings are expected to grow at 9 percent for the next year. Using the company's historical average PE as a benchmark, what is the target stock price in one year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2013 35.90 0.21 2014 15.20 0.21 2015 -5.10 0.21 2016 16.90 0.08 2017 25.90 0.10 a. What was the risk premium on common stock in each year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Year Risk Premium 2013 % 2014 % 2015 % 2016 % 2017 % b. What was the average risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
- The following information was available for the year ended December 31, 2022: Dividends per share Earnings per share 1.35 3.00 28.20 Market price per share at year-end Required: a. Calculate the price/earnings ratio for 2022. Note: Round your answer to 2 decimal places. b. Calculate the dividend payout ratio for 2022. Note: Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34). c. Calculate the dividend yield for 2022. Note: Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34). a. Price/Earning ratio b. Dividend payout ratio c. Dividend yield % Ji di %Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period: Year Large-Company US Treasury Bill 1 3.91 5.87 14.35 2.51 19.29 3.74 -14.39 7.15 2 23 a. 3 4 5 6 Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-1. Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the arithmetic average risk premium over this period? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) -31.88…Assume these are the stock market and Treasury bill returns for a 5-year period in the attached image: A. What was the risk premium on common stock in each year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Risk Premium 2013 % 2014 % 2015 % 2016 % 2017 % b. What was the average risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
- Year AT&T Stock Returns Market Index Returns 1 8 6 2 7 3 3 10 12 4 14 13 5 8 9 Compute the beta for AT&T using the historic returns presented above. Enter answer using 4 decimal places. Example: 0.1234Consider the following table for a period of six years: Returns. Year Large-Company Stocks 123456 -15.49% -26.71 37.39 24.09 -7.48 6.73 U.S. Treasury Bills 7.45% 8.07 6.03 5.87 5.53 7.88 a-1. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-2. Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-1. Arithmetic average return a-2. Standard deviation Large-company stocks % % T-bills % %Consider the following information on large-company stocks for a period of years. Arithmetic Mean Large-company stocks 14.9 % Inflation 4.8 a. What was the arithmetic average annual return on large-company stocks in nominal terms? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What was the arithmetic average annual return on large-company stocks in real terms? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
