Question

In: Finance

What is the arithmetic mean for the following stock returns: R1=6.3%, R2=4%, R3=7.2%?

You bought a bond for $950 1 year ago. You have received a coupon of $60. You can sell the bond for $977 today. What is your total dollar return?

What is the arithmetic mean for the following stock returns: R1=6.3%, R2=4%, R3=7.2%?

Solutions

Expert Solution

1.Total dollar return=(End value-Beginning value+Annual coupon)

=(977-950+60)

=$87

2.Artihmetic mean=Total return/Total time period

=(6.3+4+7.2)/3

=5.83%(Approx)


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