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A company's shares over the last four years were priced at 250p, 240p, 260p, and 258p (in chronological order). The shares paid a dividend of 5p in...

  1. A company's shares over the last four years were priced at 250p, 240p, 260p, and 258p (in chronological order). The shares paid a dividend of 5p in each year. Calculate the annual returns on the company and both the arithmetic and geometric average annual returns over the period.
  2. An account in Building Society A pays 7.4% interest, compounded quarterly, while another Building Society B pays 7.5% with annual compounding. You have £1,000 to invest. What is the value of your investment in these Societies after three years? Which Society do you prefer? What additional amount would you have to invest in this Society at the start of the fourth year to achieve a future value of £2,000 at the end of the fourth year?
  3. What is the yield to maturity on two year bond with an annual coupon rate of 5 percent, a par value of £100 and a current market price of £103?
  4. Rose Plc's next dividend is expected to be 24p per share and is expected to grow at 8 percent thereafter. If its current price is 200p, what rate of return does the market require from Rose? 
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