Calculate the average stock return

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Question 1: Calculate the average stock return from 2007-2009, standard deviation and coefficient of variation for same period.

Common Stock: The firm has 400,000 shares authorized and 100,000 shares issued at year-end 2007, 2008, and 2009.

Treasury Stock: The firm purchased 1,000 shares of treasury stock at year-end 2007, 12,000 at year-end 2008, and 20,000 at year-end 2009.

Market Valuation: The market price of the stock was $31 at year-end 2006, $35 at year-end 2007, $42 at year-end 2008, and $55 at year-end 2009. For valuation purposes, industry experts use the dividend valuation model to value the common equity interest of industry firms.

Potential investors' required rate of return for this firm is 14 percent; growth rate is 13 percent for 2010 and 2011, and then declines to 12 percent for all later years.

Market Returns: The stock returns for the market as a whole were as follows: 15.7 percent in 2007, 8.2 percent in 2008, and 12.1 percent in 2009

Reference no: EM132998889

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