4. Four years ago, you invested $50,000 in stock ABC. For the four years you have invested in this stock, you did not adjust your position. The following table represents the actual annual returns of the stock over the past four years. Years Actual Annual Return 2017 2018 2019 2020 20% -50% -20% 10% (a) Compute both the arithmetic average annual return and the geometric average annual return of ABC stock over the past four years. (b) How much is your ABC stock holding worth at the end of 2020? (c) Which average annual return (arithmetic or geometric) better reects your actual performance over the past four years? (d) Use a spreadsheet to compute your actual portfolio value at the end of each year and a hypothetical portfolio value (also starting at $50,000 in the beginning of 2017) at the end of each year when its annual return is a constant and it is equal to ABCs geometric average return over the past four years. Chart both paths on the same graph. 5. Where is Intel common stock listed? What is its listing symbol? Assume that the closing price for Intel stock lies halfway between its best bid and ask prices. Assume also that the bid/ask spread is 0.02 point. (a) If you submit a market buy order, at what price is your order likely executed? (b) If you submit a market sell order, at what price is your order likely executed? (C) Suppose you submit a limit order to sell at $56.30. What will happen most likely? (d) Suppose you submit a limit order to buy at $56.10. What will happen most likely? 4. Four years ago, you invested $50,000 in stock ABC. For the four years you have invested in this stock, you did not adjust your position. The following table represents the actual annual returns of the stock over the past four years. Years Actual Annual Return 2017 2018 2019 2020 20% -50% -20% 10% (a) Compute both the arithmetic average annual return and the geometric average annual return of ABC stock over the past four years. (b) How much is your ABC stock holding worth at the end of 2020? (c) Which average annual return (arithmetic or geometric) better reects your actual performance over the past four years? (d) Use a spreadsheet to compute your actual portfolio value at the end of each year and a hypothetical portfolio value (also starting at $50,000 in the beginning of 2017) at the end of each year when its annual return is a constant and it is equal to ABCs geometric average return over the past four years. Chart both paths on the same graph. 5. Where is Intel common stock listed? What is its listing symbol? Assume that the closing price for Intel stock lies halfway between its best bid and ask prices. Assume also that the bid/ask spread is 0.02 point. (a) If you submit a market buy order, at what price is your order likely executed? (b) If you submit a market sell order, at what price is your order likely executed? (C) Suppose you submit a limit order to sell at $56.30. What will happen most likely? (d) Suppose you submit a limit order to buy at $56.10. What will happen most likely
