Question

Use the model in File C16 to work this problem.
a. Refer back to Problem 16-9. Assume that George Rice has another investment portfolio that he set up to help pay for his daughter’s college education. The market values of his daughter’s portfolio from 2008 through 2013 are as follows:
End of Year Portfolio Value
2008 .......... $5,500
2009 .......... 5,000
2010 .......... 5,510
2011 .......... 6,010
2012 .......... 6,705
2013 .......... 6,945
Compute both the simple average return and the geometric average return for this portfolio. How does this portfolio compare to the portfolio that is given in Problem 16-9?
b. Assume that the values for both portfolios and the S&P 500 Index are as follows during the next five years:


Compute both the simple average return and the geometric average return for the portfolios during the five-year period. Compare the portfolios’ performances.
c. Compare the risk/return relationships of theportfolios.


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  • CreatedNovember 24, 2014
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