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Explanation & Answer

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1
Finance Questions
Student’s Name
Course
Institutional Affiliation
Instructor’s Name
Date
2
Finance Questions
Please answer return questions in decimal form and round to 2 decimal places (i.e., 5.10%
is .05).
Below are the values of your portfolio as well as
dividends received for each year. (Hint: Don't forget
dividends!)
Portfolio
Year
Dividends
Value
1
350
0
2
325
0
3
375
10
4
400
5
What is your portfolio return over the entire holding period?
Gain on the portfolio = dividends + capital gains
= 15 + (400-350)
= 15 + 50
= 65
Portfolio return = 65/350
= 0.19
What is your annualized return?
3
Annualized return = ((total value/initial value) ^ (1/total years)) – 1
= ((415/350) ^ (1/4) – 1
= 0.0435
= 0.04
...
