DEVRY FIN 515 Entire Course NEW DEVRY FIN 515 Week 5 Problem Set

DEVRY FIN 515 Week 5 Problem Set

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FIN 515 Week 5 Problem Set Chapter 10 ( pages 345 – 348 )
4 . You bought a stock one year ago for $ 50 per share and sold it today for $ 55 per share . It paid a $ 1 per share dividend today . a . What was your realized return ? b . How much of the return came from dividend yield and how much came from capital gain ?
20 . Consider two local banks . Bank A has 100 loans outstanding , each for $ 1 million , that it expects will be repaid today . Each loan has a 5 % probability of default , in which case the bank is not repaid anything . The chance of default is independent across all the loans . Bank B has only one loan of $ 100 million outstanding , which it also expects will be repaid today . It also has a 5 % probability of not being repaid . Explain the difference between the type of risk each bank faces . Which bank faces less risk ? Why ?
22 . Consider the following two , completely separate , economies . The expected return and volatility of all stocks in both economies is the same . In the first economy , all stocks move together — in good times all prices rise together and in bad times they all