# Environment of Financial Management and Evaluation of Financial Performance.Doc Uploaded Successfully

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Submitted By silvestrigang
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Environmental Finances
2. An investor bought 100 shares of Venus Corporation common stock one year ago for \$40 per share. She just sold the shares for \$44 each, and during the year, she received four quarterly dividend checks for \$40 each. She expects the price of the Venus shares to fall to about \$38 over the next year. Calculate the investor’s realized percentage holding period return.

Realized percentage holding period return:

= [(4400 - 4000 + 4(40))/4000] x 100%
= 14%

Since the stock has been sold, next year’s expected price performance is irrelevant.

3. An investor bought 10 Ellis Industries, Inc., long-term bonds one year ago, when they were first issued by the company. In addition, he bought 200 shares of the company’s common stock at the same time for \$30 per share. He paid \$1,000 each for the bonds, and today, the bonds are selling at \$950 each (long-term interest rates have increased slightly over the past year). The bonds have a stated interest rate of 12 percent per year. The investor received an interest payment equaling \$60 per bond six months ago and has just received another \$60 per bond interest payment. Calculate the investor’s percentage holding period return for the one year he has held the bonds.

Percentage holding period return

= [(9,500 - 10,000 + 2(600))/10,000] x100%

= 7%

4. Suppose a U.S. Treasury bill, maturing in 30 days, can be purchased today for \$99,500. Assuming that the security is held until maturity, the investor will receive \$100,000 (face amount). Determine the percentage holding period return on this investment.

500 / 99500 = 0.5%

6. a. National Telephone and Telegraph (NTT) Company common stock currently sells for \$60 per share. NTT is expected to pay a \$4 dividend during the coming year, and the price of the stock is expected to increase to \$65 a year from now. Determine the expected (ex ante)