2011 equity market exam solutions
solution for 2011 equity market
3 Exchange Credit
Resource Sample
Question 1 a) iii b) iii c) i d) ii Answer: B Expected return 14% =
$5 P $80 1 $80
=
Div1 P Po 1 Po
$11.20 = P1 $75 $86.20 = P1 e) i f) iii
Answer: C
Expected return = expected dividend yield + expected capital appreciation Then: .16 = .06 + expected capital appreciation .10 = expected capital appreciation And P1 = 110% of Po $50.00 = 1.1Po $45.45 = Po Question 2
(a)
(b)
1.06 40 1 FVA $5,000 $5,000 *154.762 $773,810 0.06 1 1 1.06 25 $773,810 $773,810 A $60,533 A 12.783...
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