Assign 2 CLO 3
Assign 2 CLO 3
ASSIGNMENT 2
NAME(S) :
:
STUDENT ID
DATE :
TOTAL /20
FBA/PFS1253/ASSIGN2
QUESTION 1
Bartman Industries’s and Reynolds Inc.’s stock prices and dividends, along with the Winslow
5000 Index, are shown here for the period 2009 – 2014. The Winslow 5000 data are adjusted
to include dividends.
Required:
a. Use the data to calculate annual rates of return for Barman, Reynolds and Winslow 5000
Index. Then calculate each entity’s average return over the 5-year period (hint: Returns
are calculated by subtracting the beginning price from the ending price to get the
capital gain or loss, adding the dividend to the capital gain or loss, and dividing the
result by the beginning price. You cannot calculate the rate of return for 2009 because
you do not have 2008 data. Refer to page 210).
b. Calculate the standard deviation of the returns for Bartman, Reynolds and Winslow 5000
Index.
c. Calculate the coefficients of variation for Bartman’s, Reynolds’s and Winslow 5000
Index.
d. Discuss the results from the above for these three portfolios.
2/CONFIDENTIAL
FBA/PFS1253/ASSIGN2
QUESTION 2
Jane sold her house on December 31 and took a $10,000 mortgage as part of the payment. The
10-year mortgage has a 10% nominal interest rate, but it calls for semiannual payments
beginning next June 30. Next year Jane must report on Schedule B of her IRS form 1040 the
amount of interest that was included in the two payments she received during the year.
b. How much interest was included in the first payment? How much repayment of principal
was included? How do these values change for the second payment?
c. How much interest must Jane report on Schedule B for the first year? Will her interest
income be the same next year?
d. If the payments are constant, why does the amount of interest income change over time?
3/CONFIDENTIAL