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The Panama Railroad Company was established in 1850 to construct a railroad across the isthmus that would allow fast and easy access between the
The Panama Railroad Company was established in 1850 to construct a railroad across the isthmus that would allow fast and easy access between the Atlantic and Pacific Oceans. The following table provides annual returns for Panama Railroad stock from 1853 through 1880. Return on Panama Railroad Company Return on Panama Railroad Company Year Stock (%) Year Stock (%) 1853 1 1867 23 1854 -9 1868 20 1855 19 1869 -11 1856 2 1870 -51 1857 3 1871 -42 1858 36 1872 39 1859 21 1873 42 1860 16 1874 12 1861 -5 1875 26 1862 43 1876 9 1863 44 1877 .6 1864 48 1878 25 1865 7 1879 31 1866 11 1880 30 (a) Create a graph of the annual returns on the stock. A stock exchange earned an annual average return of 13.4% from 1853 through 1880. Can you tell from the graph if the Panama Railroad Company stock outperformed the stock exchange? It is not possible to tell from the graph if the Panama Railroad Company stock outperformed the stock exchange. (b) Calculate the mean annual return (in %) on Panama Railroad Company stock from 1853 through 1880. (Round your answer to one decimal place.) 13.64 % Did the stock outperform the stock exchange mentioned in part (a) from 1853 through 1880? The stock underperformed the stock exchange from 1853 through 1880.
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