Lengths of expected and actual holding-periods

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Reference no: EM133641465

Question

An investor buys shares of IMP Company for $32.5 on 1 August 20XX with the original intention to hold them for a year. Dividend amount was $1.2 per year. Later on, the investor actually sells the shares on 28 August 20XX for $34.2. The following additional facts are noted:

No dividends were paid between 1 and 28 August. ?

The required return on IMP equity was 9.0% on an annual basis and 0.166% on a weekly basis.

1. What are the lengths of the expected and actual holding-periods?

2. Assume that IMP was fairly priced, calculate the investor's expected capital gains yield (price appreciation return) based on his original expected holding period.

3. Find the investor's realized return.

4. Find the realized alpha.

Reference no: EM133641465

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