Facebook’s stock price in 2015 increased by 34.15%, and in 2016, it increased by 9.93%.

Source: Data extracted from finance.yahoo.com, January 9, 2017.

a. Compute the geometric mean rate of return per year for the two-year period 2015–2016. (Hint: Denote an increase of 9.93% as R1 = 0.0993.)

b. If you purchased $1,000 of Facebook stock at the start of 2015, what was its value at the end of 2016?

c. Compare the result of (b) to that of Problem 3.19 (b).