Carolyn and Stephen both want to own company stock. Stephen is convinced that holding a few well-chosen individual stocks will result in far superior results to holding a diversified portfolio. He believes that if there make a couple of good stock picks, they will be living the good life in retirement many, many years earlier than would be possible with a diversified portfolio." Stephens aunt made a lot of money over the years holding stock in a large publically traded Canadian insurance company, and the couple has been intrigued by her lifestyle in retirement - she seems to have a lot of spare cash. She worked for 35 years for the insurance company, and her shares in the company are all held in her employee RRSP plan. Stephen and Carolyn would like the lifestyle she enjoys but they do not want to wait as long as she did. They want to achieve this goal much faster. They are planning to take half of Stephens RRSP account and invest it in two Western Canadian oil & gas companies because they heard, first from Carolyn's dentist, and second from one of Stephen's co-workers, that the Western Canadian oil & gas sector is about to enter another major expansion. They are also planning to take most of Carolyns RRSP account and invest it in AbbVie Inc. (ABBV-NYSE), Amgen Inc. (AMGN-NASDAQ), and Bristol-Myers Squibb Company (BMY-NYSE), all of which are pharmaceutical companies. Stephen and Carolyn are particularly interested in Abbvie Inc., a company that resulted from a spin-off of Abott Laboratories. AbbVie manufactures several biological drugs, and the couple believes that investing in the company's stock is a "no-brainer" because the stock is basically guaranteed to go up. Further, Christine Galarde, the couples neighbor and a retired teacher, has been following AbbVie carefully and believes that the companys stock is poised for explosive growth. She has convinced Stephen and Carolyn that Abbvie's stock value will double in the next five or six years.

9. If Carolyn & Stephen were to buy AbbVie stock and the stock were to double in value over the next 5 years:

a. What annual return, compounded semi-annually, would they realize?