The Domestic and International Financial Marketplace

8. a.) National Telephone and Telegraph (NTT) Company common stock currently sells for $60 per share. NTT is expected to pay a $4 dividend during the coming year, and the price of the stock is expected to increase to $65 a year from now.

Determine the expected (ex ante) percentage holding period return on NTT common stock.

b.) Suppose that one year later, NTT’s common stock is selling for $75 per share. During the one-year period, NTT paid a $4 common stock dividend. Determine the realized (ex post) percentage holding period return on NTT common stock.

c.) Repeat Part b given that NTT’s common stock is selling for $58 one year later.

d.) Repeat Part b given that NTT’s common stock is selling for $50 one year later.