Homework Answers
The stock price follow a geometric mean as opposed to arithmetic mean. Hence the answer shall not be B.
The 4 years successive returns shall be:
((1+5%)*(1-5%)*(1+9%)*(1-9%))-1
=((1+0.05)*(1-0.05)*(1+0.09)*(1-0.09))-1
=-0.010579
or -1.06%
Hence option D is correct
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