Example 1: Consider one day investment in Endesa stock. Suppose you buy a stock in day t-1 for 24.27 and sell the stock in the next day for 24.30 . Further assume that Endesa does not pay any dividend between days t-1 and t.

a) Calculate the one day simple and continuously compounded return.

b) Suppose that the price of Endesa stock in day t-2 was 24.23 and that no dividend was paid between days t-2 and t-1. Calculate the two day simple and continuously compounded return.

c) Calculate the annualized return.