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Q.3. A million-dollar investment in the stock market yielded the following annual rates of return: Year 1 2 2 4 5 Annual rate of
Q.3. A million-dollar investment in the stock market yielded the following annual rates of return: Year 1 2 2 4 5 Annual rate of return -.10 -.20 .10 .50 .80 a. What is the value of the investment after each of the 5 years? b. Compute the arithmetic mean and the geometric mean of the annual rates of return. c. Assume that each year's return is equal to the geometric mean. Compute the value of the investment after each year. d. Repeat part (c) assuming the returns are equal to the arithmetic mean.
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