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( Solving a comprehensive problem ) Use the end - of - year stock price data in the popup window, to answer the following questions
Solving a comprehensive problem Use the endofyear stock price data in the popup window, to answer the following questions for the Harris and Pinwheel companies. a Compute the annual rates of return for each time period and for both firms. any dividends. c Compute a threeyear rate of return spanning the entire period ie using the ending price for period and ending price for period d Since the rate of return calculated in part is a threeyear rate of return, convert it to an annual rate of return by using the following equation: tvpe of averace rate of return arithmetic or aeometric should vou use? Whv Solving a comprehensive problem Use the endofyear stock price data in the popup window, to answer the 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 threeyear period using your annual rates of return from part aNote: you may assume that neither firm pays any dividends. c Compute a threeyear rate of return spanning the entire period ie using the ending price for period and ending price for period d Since the rate of return calculated in part is a threeyear 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 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? The annual rate of return converted e How is the annual rate of return A The annual rate of return cal B The annual rate of return cal C The annual rate of return cal D The annual rate of return cal When you are evaluating the perforr choice below. A The arithmetic rate of return best used for a single period B Arithmetic average return be over a period. c Geometric average return better describes the average annual rate of return over a period because it is a simple average, so it answers the question concerning the expected rate of return over a period. D The geometric rate of return should be used. It better describes the average annual rate of return over a period because it compounds at the same rate while the arithmetic rate of return is best used for a single period. Data table tableTimeHarris,Pinwheel$$
Solving a comprehensive problem Use the endofyear stock price data in the popup window, to answer the following questions for the Harris and Pinwheel companies.
a Compute the annual rates of return for each time period and for both firms. any dividends.
c Compute a threeyear rate of return spanning the entire period ie using the ending price for period and ending price for period
d Since the rate of return calculated in part is a threeyear rate of return, convert it to an annual rate of return by using the following equation: tvpe of averace rate of return arithmetic or aeometric should vou use? Whv
Solving a comprehensive problem Use the endofyear stock price data in the popup window, to answer the 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 threeyear period using your annual rates of return from part aNote: you may assume that neither firm pays any dividends.
c Compute a threeyear rate of return spanning the entire period ie using the ending price for period and ending price for period
d Since the rate of return calculated in part is a threeyear 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 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?
The annual rate of return converted
e How is the annual rate of return
A The annual rate of return cal
B The annual rate of return cal
C The annual rate of return cal
D The annual rate of return cal
When you are evaluating the perforr choice below.
A The arithmetic rate of return best used for a single period
B Arithmetic average return be over a period.
c Geometric average return better describes the average annual rate of return over a period because it is a simple average, so it answers the question concerning the expected rate of return over a period.
D The geometric rate of return should be used. It better describes the average annual rate of return over a period because it compounds at the same rate while the arithmetic rate of return is best used for a single period.
Data table
tableTimeHarris,Pinwheel$$
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