BFF2701 Equity Markets
Tutorial 3 Questions
Question 1
The price and dividends of stock A are as follows:
|
Year
|
Year-end stock price
|
Dividends through the year
|
|
2019
|
60
|
2
|
|
2020
|
65
|
0
|
|
2021
|
63
|
2
|
|
2022
|
62
|
2
|
|
2023
|
70
|
2
|
|
2024
|
71
|
2
|
a. Suppose you purchased the stock at the end of 2019 and sold it at the end of 2021. What is your rate of return?
b. Suppose you purchased the stock at the end of 2019 and sold it at the end of 2024. What is your rate of return? Decompose your returns into returns from capital gain and returns from dividends
Question 2
Link each sentence from “a” to “d” to describe each institutional investor
(1) Pension funds
(2) Private equities
(3) Hedge funds
(4) High-frequency traders
a. Most short-selling is done by this institutional investor.
b. The majority of these institutional investors aim to increase firm value by acquiring and changing the firm’s operations.
c. They decrease the latency by colocation
d. It can be largely classified as defined benefits and defined contributions.