Assignment #3 (My Answer from Investments MC PS3 Quizlet) Latest Update

Assignment #3 (My Answer from Investments MC PS3 Quizlet) Latest Update A year ago, you invested $10,000 in a savings account that pays an annual interest rate of 5%. What is your approximate annual real rate of return if the rate of inflation was 3.5% over the year? - Answers1.5% 5% - 3.5% = 1.5%. You have been given this probability distribution for the holding-period return for GM stock: Stock of Economy: Probability HPR Boom. 0.40. 30% Normal Growth. 0.40. 11% Recession. 0.20. 10% What is the expected holding period return for GM stock? - AnswersHPR=0.40 (30%) + 0.40 (11%) + 0.20 (-10%)= 14.4% You have been given this probability distribution for the holding-period return for KMP stock: Stock of the Economy: Probability. HPR Boom. 0.30. 18% Normal. 0.50. 12% Recession. 0.20. 5% What is the expected standard deviation for KMP stock? - AnswersS = [0.30(18-10.4)^2 + 0.50 (12-10.4)^2 + 0.20 (-5-10.4)^1/2 = 8.13% Over the past year, you earned a nominal rate of interest of 10% on your money. The inflation rate was 5% over the same period. The exact actual growth rate of you purchasing power was - Answersr = (1 + R)/(1 + I) - 1 1.10%/1.05% - 1 = 4.8% Which of the following factors would not be expected to affect the nominal interest rate? - AnswersThe coupon rate on previously issued government bonds The holding-period return (HPR) for a stock is equal to - Answersthe dividend yield plus the capital gians yield.