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Homework answers / question archive / The? S&P stock index represents a portfolio comprised of 500 large publicly traded companies
The? S&P stock index represents a portfolio comprised of 500 large publicly traded companies. On December? 24, 2007, the index had a value of? 1,410 and on December? 24, 2008, the index was approximately 901. If the average dividend paid on the stocks in the index is approximately 3.5 percent of the value of the index at the beginning of the? year, what is the rate of return earned on the? S&P index? What is your assessment of the relative riskiness of investing in a single stock such as Google compared to investing in the? S&P index? (recall from Chapter 2 that you can purchase mutual funds that mimic the returns of the? index)?
Rate of return= ((December 24, 2007 index- December 24, 2008 Index)/ December 24, 2008 Index)* 100+ % of dividend
= (((1410- 901)/ 901)* 100)+ 3.5%
= 59.99%
Investing into single stock has higher danger contrasted with putting resources into a file like S&P. This is on the grounds that; putting resources into file enhances the danger as it comprises of supplies of numerous organizations
