Question

1. Fred purchased 100 shares of Ekto Corporation common stock for $30.3 per share on June 1, 2001 and then sold it exactly 11 years later for $43.91 per share. What was Fred's geometric mean average annual return on this investment?

   		4.08%
   		2.82%
   		3.43%
   		2.48%

1 points   

QUESTION 6

1. Fred purchased 100 shares of Ekto Corporation common stock for $31.99 per share on June 1, 2001 and then sold it exactly 3 years later for $43.53 per share. What was Fred's geometric mean average annual return on this investment?

   		12.02%
   		8.84%
   		8.15%
   		10.81%

1 points   

QUESTION 7

1. Jane's investment portfolio had annual returns over the last five years as shown below. What was the geometric mean average annual return for Jane's portfolio?

   Year	Annual Return
   1	9%
   2	19.9%
   3	-8.1%
   4	4.1%
   5	13.6%

   Show your answer in decimal form to four places. For example, if your answer was 12.34% you would input 0.1234. If you got -17.33% then you would input -0.1733. To go to decimal form from percents, just throw away the percent sign and then move the decimal place to the right two spaces. If you do the calculations in Excel, then just reset the formatting to "general" and past the result into Blackboard.

1 points   

QUESTION 8

1. Joe bought ABC stock on January 10th for $191.01 per share. The stock paid a dividend of $1.25 in March and another dividend of $1.59 in June. He sold it in July for $198.54. What was Joe's holding period return? Show your answer in decimal form to four places.

   Note: Decimal form means without the % sign. If you divide 10 by 35, the answer is 0.285714 in decimal form and 28.5714% in percentage form. Use decimal form for the calculated questions (it is a Blackboard issue).

Answer 1

Answer 5:

Correct answer is:

3.43%

Explanation:

Geometric mean average annual return = (Ending Value / Start value) ^(1 / Number of Years) - 1

= (43.91 / 30.3)^(1/11) -1

= 3.43%

Option C is correct and other options A, B and D are incorrect.

Answer 6:

Correct answer is:

10.81%

Explanation:

Geometric mean average annual return = (Ending Value / Start value) ^(1 / Number of Years) - 1

= (43.53 / 31.99)^(1/3) -1

= 10.81%

Option D is correct and other options A, B and C are incorrect.

Answer 7:

Geometric mean average annual return = 0.0727 or 7.27%

Working:

Geometric mean average annual return = ((1 + 9%) * (1 + 19.9%) * (1 - 8.1%) * (1 + 4.1%) * (1 + 13.6%)) ^(1/5) - 1

= 0.0727 or 7.27%

Answer 8:

Holding period return = 0.0543 or 5.43%

Working:

Holding period return = (198.54 - 191.01 + 1.25 + 1.59) / 191.01 = 0.0543 or 5.43%