You buy a stock for $20. After a year the price rises to $25 but falls back to $20 at the end of the

  1. You buy a stock for $20. After a year the price rises to $25 but falls back to $20 at the end of the second year. What was the average percentage return and what was the true annualized return?

4. Given the following information concerning four stocks,

Price Number of shares

Stock A $10 100,000

Stock B $17 50,000

Stock C $13 150,000

Stock D $20 200,000

  1. Construct a simple price-weighted average, a value-weighted average, and a geometric average.

6. An investor buys a stock for $35 and sells it for $56.38 after five years.

a) what is the holding period return?

b) what is the true annual rate of return?

8. Do the fundamental economic goals of fiscal policy differ from those of monetary policy? If the Federal Reserve finances the federal government’s deficit, what will happen to the supply of money?

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