Answer to question
Airthmetic Average Return | |||||||
Year | Return | ||||||
1 | 0.00% | ||||||
2 | 9.64% | ||||||
3 | -12.57% | ||||||
4 | 41.15% | ||||||
5 | 29.56% | ||||||
6 | 20.63% | ||||||
88.41% | |||||||
Airthmetic Average Return | 14.74% | ||||||
Geometric Average Return | |||||||
Formula | (1 + R1) × (1 + R2) × ... × (1 +Rn))(1/n) - 1 | ||||||
Year | 1 | 2 | 3 | 4 | 5 | 6 | |
Return | 0.00% | 9.64% | -12.57% | 41.15% | 29.56% | 20.63% | |
Add 1 | 1 | 1 | 1 | 1 | 1 | 1 | |
(1+R1) | 1.00 | 1.10 | 0.87 | 1.41 | 1.30 | 1.21 | 1.13 |
-1 | |||||||
13.29% | |||||||
Geometric Average Return | 13.29% | ||||||
Working Note | |||||||
Return calculation | |||||||
Year | Price | Dividend | Return | ||||
1 | 99.15 | 0 | 0.00% | ||||
2 | 107.11 | 1.6 | 9.64% | ||||
3 | 91.65 | 2 | -12.57% | ||||
4 | 127.16 | 2.2 | 41.15% | ||||
5 | 162.15 | 2.6 | 29.56% | ||||
6 | 192.6 | 3 | 20.63% | ||||
Return formula = (Closing price-opening Price+ dividend)/opening Price | |||||||
2. 10.00 points A stock has had the following year-end prices and dividends. Year Dividend Price...
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