Answer Case Study 1 2 and 5 Thank youSolutionQuestion 1 Over

Answer Case Study 1, 2, and 5. Thank you!

Solution

Question 1:

Overall return for Stocks after 12 years = Compounded return for growth of 5% + the dividend yield each year

Compounded return for growth of 5% =(1+0.05)^12 -1 = 0.795856

The dividend yield each year = 0.02*12 = 0.24

Overall return over 12 years for stocks =0.795856 +0.24 = 1.035856 = 103.59%

Overall return for bonds over 12 years= 0.05*12 = 0.60 = 60%

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