Warren Buffett, arguably the most famous investor in the United States, is the CEO of Berkshire Hathaway (BRK), a company that has enjoyed great success in terms of its stock price. Below are the actual year-end stock prices for BRK-A from 1965 through 2011. (Yes, these are the actual stock prices, believe it or not.)
a. Calculate the return relatives for each year starting in 1966. Use two decimal places.
b. Calculate the arithmetic mean and geometric mean for these price relatives, using three decimal places.
c. Calculate the cumulative wealth index for 1966—2011, assuming an initial investment of $1,000, and $10,000. State the answers without decimal places.
Year Year End Price
1965 $16.25
1966 $17.50
1967 $20.25
1968 $37.00
1969 $42.00
1970 $39.00
1971 $70.00
1972 $80.00
1973 $71.00
1974 $40.00
1975 $38.00
1976 $94.00
1977 $138.00
1978 $157.00
1979 $320.00
1980 $425.00
1981 $560.00
1982 $775.00
1983 $1,310.00
1984 $1,275.00
1985 $2,470.00
1986 $2,820.00
1987 $2,950.00
1988 $4,700.00
1989 $8,675.00
1990 $6,675.00
1991 $9,050.00
1992 $11,750.00
1993 $16,325.00
1994 $20,400.00
1995 $32,100.00
1996 $34,100.00
1997 $46,000.00
1998 $70,000.00
1999 $56,100.00
2000 $71,000.00
2001 $75,600.00
2002 $72,750.00
2003 $84,250.00
2004 $87,900.00
2005 $88,620.00
2006 $109,990.00
2007 $141,600.00
2008 $96,600.00
2009 $99,200.00
2010 $120,450.00
2011 $114,755.