- You are the manager of the Mighty Fine mutual fund. The following table reflects the activity of the fund during the last quarter. The fund started the quarter on January 1 with a balance of $100 million.
|
|
January
|
February
|
March
|
|
HPR
|
-1.3%
|
6.2%
|
2.2%
|
Calculate the quarterly arithmetic average return on the fund
Calculate the quarterly geometric (time-weighted) average return on the fund.
- The common stock of Perforated Pools Liners, Inc.(PPL) now sells for $54.00 per share. The table below shows the anticipated stock price and dividend to be paid one year from now. Both the price and the dividend will depend on the level of growth experienced by the firm.
|
State
|
Probability
|
End-of-year Price
|
Annual Dividend
|
|
Super High Growth
|
0.1
|
$62.00
|
$3.00
|
|
High Growth
|
0.2
|
$58.00
|
$3.00
|
|
Normal
|
0.4
|
$56.00
|
$2.00
|
|
Low Growth
|
0.2
|
$50.00
|
$2.00
|
|
No Growth
|
0.1
|
$46.00
|
$0.00
|
- Calculate the HPR for each of the possible states. Assuming a one-year period.
- What is the expected return for holder of PPL stock?
What is the standard deviation of the returns?