Calculate the annual arithmetic mean and geometric mean return on the following security, purchase price: $42; first-year dividend - $4; price after one year - $47; second-year dividend - $4; selling price after two years = $40. (Round intermediate calculations to 3 decimal places, eg. 15.251% and the final answers to 2 decimal places, e.g. 15.25%.) 1) Find arithmetic average return % 2) Find Geometric mean return % 3) State which method is more appropriate for the situation
Calculate the annual arithmetic mean and geometric mean return on the following security, purchase price: $42; first-year dividend - $4; price after one year - $47; second-year dividend - $4; selling price after two years = $40. (Round intermediate calculations to 3 decimal places, eg. 15.251% and the final answers to 2 decimal places, e.g. 15.25%.) 1) Find arithmetic average return % 2) Find Geometric mean return % 3) State which method is more appropriate for the situation
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Calculate the annual arithmetic mean and geometric mean return on the following security,
purchase price: $42; first-year dividend - $4; price after one year - $47; second-year dividend - $4; selling price after two years = $40. (Round intermediate calculations to 3 decimal places, eg. 15.251% and the final answers to 2 decimal places, e.g. 15.25%.)
1) Find arithmetic average return %
2) Find Geometric mean return %
3) State which method is more appropriate for the situation
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