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Solutions:: Questions

This document contains 4 questions asking about financial concepts like holding period return, standard deviation, expected rates of return, and constructing different stock market indices. It provides sample data for questions 2, 3, and 4 involving probability distributions, stock returns, and the market value and shares outstanding of Citigroup and Google. The questions examine calculations related to these financial metrics and how changing stock prices, splits, or index type would affect the results.

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Aimen Ayub
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28 views8 pages

Solutions:: Questions

This document contains 4 questions asking about financial concepts like holding period return, standard deviation, expected rates of return, and constructing different stock market indices. It provides sample data for questions 2, 3, and 4 involving probability distributions, stock returns, and the market value and shares outstanding of Citigroup and Google. The questions examine calculations related to these financial metrics and how changing stock prices, splits, or index type would affect the results.

Uploaded by

Aimen Ayub
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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QUESTIONS

Q1. If price per share at year’s start and year’s end is $100 and $110 simulaneously and cash
dividends over the year amount to $4. Calculate Holding period return.

Q2. What is the standard deviation of a random variable q with the following probability
distribution:

Q3. Using following data, Calculate


a) Expected rates of return for stocks X and Y
b) Standard Deviation of return on stocks X and Y

Q4. Use following data

Company Stock Shares Outstanding Market Value ($ Billions)


Price (in Billions)
= Stock Price x Shares Out.
($/share)

Citigroup (C) $ 20 5.0 $20 x 5 = $100

Google $ 450 0.1 $450 x 0.1 = $45


(GOOG)

1) Construct each of the 3 types of indices.


2) Examine how each index changes if C’s stock price increases 10% and GOOG’s price
drops by 20%.
3) Examine the impact of a 2:1 stock split by GOOG.
4) Examine the implications of index type on mutual fund managers whose funds are
supposed to replicate each index’s return.

SOLUTIONS:

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