the end$-$of$-$year stock price data in the popup window,

$($Solving a comprehensive problem$)$ Use to answer the following questions for the Harris and Pinwheel companies.

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 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 $4).$ that neither firm pays any dividends.$)$

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:

Three$-$Year Rate of Return

Annual Rate of Return $1+$

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?

b$.$ The arithmetic average rate of return earned by investing in Harris stock over this period is $\%.($Round to two decimal places.$)$

The arithmetic average rate of return earned by investing in Pinwheel stock over this period is $\%($Round to two decimal places.$)$

The geometric average rate of return earned by investing in Harris stock over this period is $\%.($Round to two decimal places:$)$

The geometric average rate of return earned by investing in Pinwheel stock over this period is $\%.($Round to two decimal places.$)$

c$.$ The three$-$year rate of return spanning the entire period for Harris is $\%.($Round to two decimal places.$)$

The three$-$year rate of return spanning the entire period for Pinwheel is $\%.($Round to two decimal places.$)$

d$.$ The annual rate of return converted from the three$-$year rate in part c for Harris is $\%.($Round to two decimal places.$)$

The annual rate of return converted from the three$-$year rate in part c for Pinwheel is $\%.($Round to two decimal places.$)$

e$.$ How is the annual rate of return calculated in part d related to the geometric rate of return? $($Select the best choice below.$)$

OA$.$ The annual rate of return calculated in part d is the same as the geometric rate of return in this problem but this is only a coincidence.

OB$.$ The annual rate of return calculated in part d is nothing but the geometric average rate of return calculated in a different way

OC$.$ The annual rate of return calculated in part d is nothing but the arithmetic average rate of return calculated in a different way

OD$.$ The annual rate of return calculated in part d is not related to the geometric average 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? $($Select the best choice below.$)$ O A$.$ Arithmetic 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. OB$.$ 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 OC$.$ 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.

OD$.$ The arithmetic 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 geometric rate of return is best used for a

single period................$---------$