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Suppose you purchased a stock at the end of 2017 and sold it at the end of 2019. The year-end stock prices are shown below

Suppose you purchased a stock at the end of 2017 and sold it at the end of 2019. The year-end stock prices are shown below and the stock paid no dividends.

2017

2018

2019

$100

$112

$100

  1. Compute the average annual return according to the arithmetic mean method.

  1. Compute the average annual return according to the geometric mean method.

  1. Compare the results in (i) and (ii), and indicate which is more intuitively appealing in assessing the performance of your investment.

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