A stock has had the following year-end prices and dividends: Year Price Dividend0 $43.29  - 1  48.27 $.48 2  57.19  .51 3  45.27  .60 4  52.19  .65 5  61.27  .73   What are the arithmetic and geometric average returns for the stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)   Arithmetic average return %Geometric average return %

Question
Asked Nov 9, 2019
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A stock has had the following year-end prices and dividends:
 

Year   Price  Dividend
0   $ 43.29     -  
1     48.27   $ .48  
2     57.19     .51  
3     45.27     .60  
4     52.19     .65  
5     61.27     .73  
 

 
What are the arithmetic and geometric average returns for the stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
 

   
Arithmetic average return  %
Geometric average return  %
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Expert Answer

Step 1

Calculation of Arithmetic and Geometric Average Return:

The arithmetic average return is 9.57% and geometric average return is 8.41%.

Excel Spreadsheet:

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А В C Dividend Return 1 Year Price $43.29 0 $0.48 1 $48.27 12.61% $0.51 4 $57.19 19.54% $45.27 5 3 $0.60 -19.79% $52.19 $0.65 6 4 16.72% $0.73 7 5 $61.27 18.80% Arithmetic Average Return 8 9.57% Geometric Average Return 8.41% n CO O

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