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Question 2 (a) An investor purchased share of Circle Corp on 1 Jan 2016 and held the investment until 31 December 2020. Details of Circle

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Question 2 (a) An investor purchased share of Circle Corp on 1 Jan 2016 and held the investment until 31 December 2020. Details of Circle Corp's share price and dividend payout during the period of investment are as follows: Date Dividend (S) 1 Jan 2016 31 Dec 2016 31 Dec 2017 31 Dec 2018 31 Dec 2019 31 Dec 2020 Share price ($) 5.75 6.00 6.40 6.30 5.90 6.09 0.24 0.25 0.30 0.32 0.40 Compute: (1) Arithmetic average rate of return for 2016, 2017, 2018, 2019 and 2020 separately. (5 marks) (ii) Geometric average rate of return for the entire investment period from 2016 until 2020. (5 marks) (iii) Logarithmic returns for the entire investment period from 2016 until 2020. (2 marks) (b) Discuss the difference between capital gains and dividend income. (8 marks)

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