Question

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Chapter 12 Homework i A stock has had the following year-end prices and dividends: Year 1 2 Price Dividend $ 43.41 - 48.39 $.66 57.3169 45.39 80 52.31 85 61.39 .93 10 points Print What are the arithmetic and geometric average returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) References Arithmetic average return Geometric average return

Answer 1

Arithmatic and Geometric Year Price Dividend Returns (1+r) 43.41 48.39 0.66 0.12 1.12 57.31 0.69 0.18 1.18 45.39 0.8 -0.22 0.78 52.31 0.85 0.16 1.16 61.39 0.93 0.18 1.18 8.41% 18.93% Arithmatic Average Geometric Average

Formulae

Returns (1+r) 21 Arithmatic and Geometric 22 Year 23 1 24 =A23+1 25 =A24+1 26 =A25+1 27 =A26+1 28 =A27+1 29 Arithmatic Average 30 Geometric Average Price Dividend 43.41 48.39 0.66 57.31 0.69 45.39 0.8 52.31 0.85 61.39 0.93 =AVERAGE(D24:D28) = ((E24*E25*E26*E27*E28)^0.5) -1 =LN((B24+C24)/B23) =LN((B25+C25)/B24) =LN((B26+C26)/B25) =LN((B27+C27)/B26) =LN((B28+C28)/B27) =1+D24 =1+D25 =1+D26 =1+D27 =1+D28