Answered: The return pattern on your favorite…

The return pattern on your favorite stock has been 5.39%, 8.26%, -12.04%, and 14.27% over the last four years. What are the average arithmetic and geometric rates of return?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 17P

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Question

The return pattern on your favorite stock has been 5.39%, 8.26%, -12.04%, and 14.27% over the last four years. What are the average arithmetic and geometric rates of return?

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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