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# Fundamentals of Investments: Risk, Returns, and Forecasting

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QUESTION:
You have owned the stock of Micro Co Ltd for the last five years. Historical data for the stock are as follows:

Market Price of Micro Company's Stock
Year Dividend Income Beginning Ending
2008 \$1.00 \$30.00 32.50
2009 1.20 32.50 35.00
2010 1.30 35.00 33.00
2011 1.60 33.00 40.00
2012 1.75 40.00 45.00

Required:
a. Calculate the total return (in dollars) for each year.
b. Indicate the level of return you would expect in 2013.

##### Solution Summary

The solution describes and explains the following:
1. Calculating past returns on an investment in stocks
2. Forecasting future returns using HPR (Holding Period Return) and Arithmetic average.

##### Solution Preview

Solution is attached.

INVESTMENTS
FINANCIAL MANAGEMENT
RISK AND RETURN
TOPIC:
1. Calculating past returns on an investment in stocks
2. Forecasting future returns using HPR (Holding Period Return) and Arithmetic average.

QUESTION:
You have owned the stock of Micro Co Ltd for the last five years. Historical data for the stock are as follows:
Market Price of Micro Company's Stock
Year Dividend Income Beginning Ending
2008 \$1.00 \$30.00 32.50
2009 1.20 32.50 35.00
2010 1.30 35.00 33.00
2011 1.60 33.00 40.00
2012 1.75 40.00 45.00
Required:
a. Calculate the total return (in dollars) for each year.
b. Indicate the level of ...

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