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You invest in a stock over a 5-year period. The returns in each of the 5 years are: 10%, 1%, -12%, 4%, and 20%. For all quest

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Answer #1

a.

HPR = 0.10 + 0.01 -0.12 + 0.04 + 0.20

HPR = 23.0%

b.

Average Return = (0.10 + 0.01 -0.12 + 0.04 + 0.20)/5

Average Return = 4.6%

c.

CAGR = [(1.10)(1.01)(0.88)(1.04)(1.20)]1/5 - 1

CAGR = 4.1%

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