CHAPTER 1: The Key Concepts of Investment

1. On February 1, you bought XX Corporation stock for RM34 a share and a year later you sold it
for RM39 a share. During the year you received a cash dividend of RM1.50 a share. Compute you
HPR and HPY on this stock.

2. Calculate Annualized HPY of:

i. Fund A held 5 years during which it appreciated from RM100 to RM150 and provided
RM5 in distribution.
ii. Fund B went from RM200 to RM320 and generated RM10 in 4 years.

3. Johnson and Johnson bought Stock A for 2 years ago for RM10 and it is currently selling at
RM15. What is annual HPY?

4. World Co. bought Stock D for 7 years ago for RM150 and it is currently selling at RM230. What
is annualized HPY?

5. Given the following information, compute annualized HPY for each asset if you invest RM2000
for the beginning.

ASSET ENDING INVESTMENT LENGTH OF HOLDING

PERIOD
Axis RM3300 4 years
Brown RM2100 6 months
Cleo RM1800 10 years

6. Based on the following table, calculate the AM and GM for this stock.

YEAR BEGINNING ENDING HPR HPY

VALUE (RM) VALUE (RM)
1 90 110 1.22 0.22
2 110 138 1.25 0.25
3 138 112 0.81 -0.19
7. Calculate arithmetic mean and geometric mean by using information below:

YEAR RETURN (%)

1 9
2 6
3 -5
4 11
5 3

8. The following data shows the beginning and ending values of investment A for a period 3 years.

YEAR BEGINNING VALUE ENDING VALUE

1 10 25

2 20 35

3 30 45