Please complete all sections to completely answer the question.
a. Compute the annual rates of return for each time period and for both firms.
b. Calculate both the arithmetic and the geometric mean rates of return for the entire three-year period using your annual rates of return from part
(Note: you may assume that neither firm pays any dividends.)
c. Compute a three-year rate of return spanning the entire period (i.e., using the ending price for period 1 and ending price for period 4).
d. Since the rate of return calculated in part c is a three-year rate of return, convert it to an annual rate of return by using the following equation:
e. How is the annual rate of return calculated in part d related to the geometric rate of return? When you are evaluating the performance of an investment that has been held for several years, what type of average rate of return (arithmetic or geometric) should you use? Why?
Homework: Chapter 7 Homework Score: 0 of 1 pt P7-10 (similar to) 7 of 7 (5 complete) HW Score: 71.43%, 5017 pts Question Help Solving a comprehensive problem use the end of year stock price data n the popup window, to answer he following questions for the Harris and Pinwheel companies. a. Compute the annual rates of return for each time period and for both firms b. Calculate both the arithmetic and the geometric mean rates of return for the entire three-year period using your annual rates of return from part a. (Note: you may assume that neither firm pays any dividends.) C. Compute a three-year rate of return spanning the entire period (le.. using the ending price for period 1 and ending price for period 4) d. Since the rate of retun calculated in part c is a three-year rate of return, convert it to an annual rate of return by using the following equation Three-Year1 Rate of Retun 1 Annual Rate) of Return e. How is the annual rate of retum calculated in part d related to the geometric rate of return? When you are evaluating the performance of an investment that has been held for several years, what type of average rate of return (arithmetic or geometric) should ou use? Why? a. Enter the annual rate of return for each year for Harris in the table below, (Round to two decimal places.) Data Table Value of Harris Stock S9 10 Annual Rate of Returmm Value of Annual Rate of Return Time S18 35 28 26 S9 10 13 17 35 28 26 17 Print Done Enter your answer in the edit fields and then click Check Answer Homework: Chapter 7 Homework Score: 0 of 1 pt P7-10 (similar to) 7 of 7 (5 complete) HW Score: 71.43%, 5017 pts Question Help Solving a comprehensive problem use the end of year stock price data n the popup window, to answer he following questions for the Harris and Pinwheel companies. a. Compute the annual rates of return for each time period and for both firms b. Calculate both the arithmetic and the geometric mean rates of return for the entire three-year period using your annual rates of return from part a. (Note: you may assume that neither firm pays any dividends.) C. Compute a three-year rate of return spanning the entire period (le.. using the ending price for period 1 and ending price for period 4) d. Since the rate of retun calculated in part c is a three-year rate of return, convert it to an annual rate of return by using the following equation Three-Year1 Rate of Retun 1 Annual Rate) of Return e. How is the annual rate of retum calculated in part d related to the geometric rate of return? When you are evaluating the performance of an investment that has been held for several years, what type of average rate of return (arithmetic or geometric) should ou use? Why? a. Enter the annual rate of return for each year for Harris in the table below, (Round to two decimal places.) Data Table Value of Harris Stock S9 10 Annual Rate of Returmm Value of Annual Rate of Return Time S18 35 28 26 S9 10 13 17 35 28 26 17 Print Done Enter your answer in the edit fields and then click Check
