Problem 18-5 (Algo) 7.69 Consider the rate of return of stocks ABC and XYZ. points Year ABC XYZ 23% 40% 12 10 UI AWNP 17 17 eBook 0 2 -10 Required: Print a. Calculate the arithmetic average return on these stocks over the sample period. (Do not round intermediate calculations. Round your answers to 2 decimal places.) References Arithmetic Average ABC XYZ % b. Which stock has greater dispersion around the mean return? O ABC O XYZ c. Calculate the geometric average returns of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Geometric Average "ABC % XYZc. Calculate the geometric average returns of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Geometric Average d. If you were equally likely to earn a return of 23%, 12%, 17%, 3%, or 2%, in each year (these are the five annual returns for stock ABC), what would be your expected rate of return? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected rate of return | | % e. What if the five possible outcomes were those of stock XYZ7 (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected rate of return | | % f. Given your answers to (d) and (&), which measure of average return, arithmetic or geometric, appears more useful for predicting future performance? Arithmetic O Geometric 769 points References Problem 18-6 (Algo) XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2819 78 %4 2020 a8 4 2821 68 4 2922 78 4 An investor buys three shares of XYZ at the beginning of 2019, buys another two shares at the beginning of 2020, sells one share at the beginning of 2021, and sells all four remaining shares at the beginning of 2022. Required: a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-year rates of return and final answers to 2 decimal places. Do not round other calculations.) Arithmetic average rate of return % Geometric average rate of return % b. What is the dollar-weighted rate of return? (Hint. Carefully prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2019, to January 1, 2022 If your calculator cannot calculate IRR, you will have to use trial and error or a spreadsheet program.) (Round your answer to 4 decimal places. Negative amount should be indicated by a minus sign.) Dollar-weighted rate of return | % 3 Problem 18-7 (Algo) A manager buys three shares of stock today, and then sells one of those shares each year for the next 3 years. His actions and the price history of the stock are summarized below. The stock pays no dividends. 769 points Time Price Action 2 165 Buy 2 shares Skipped 1 195 Sell 1 share 2 1495 Sell 1 share 3 145 5ell 1 share H Required: Eook a. Calculate the time-weighted geometric average return on this portfolic. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Print Geometric average return | |% References b. Calculate the time-weighted arithmetic average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Arithmetic average return | |% c. Calculate the dollar-weighted average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Dollar-weighted average return %