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| Teaching Since: | May 2017 |
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MBA (IT), PHD
Kaplan University
Apr-2009 - Mar-2014
Professor
University of Santo Tomas
Aug-2006 - Present
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The solution must be broken down to show all work to the answer in detail. Â
CANNOT BE IN EXCEL AND MUST IN WORD DOCUMENT SHOWING ALL WORK IN DETAIL INCLUDING THE FORMULA.
Caswell Enterprises had the following end-of-year stock prices over the last five years and paid no dividends.
Time             Caswell
1Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $9
2Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $14
3Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $10
4Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $7
5Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $9
a. Calculate the average rate of return for each year from the above information.
b. What is the arithmetic average rate of return earned by investing in Caswell's stock over this period?
c. What is the geometric average rate of return earned by investing in Caswell's stock over this period?
d. Considering the beginning and ending stock prices for the five-year period are the same, which type of average rate of return best describes the annual rate of return earned over the period (arithmetic or geometric)?
e. The annual rate of return at the end of year 2 is what percent?
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