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a. Compute the annual rates of return for each time period and for both firms b. Calculate both the arithmetic and the geometric mean rates of return for the entire three-year period using your annual rates of return ficm part a. (Note: you may B5sume that neither firm pays ary dividends.) c. Compule a three-year rate of return spanning the entire period (Le, using the ending price for period 1 and ending price for period 4 ). d. Since the rate of return calculated in part c is a threq-year rate of return, convert it to an annual rate of retum by using the following equation: (1+Three-Year)=(AnnualRateRateofReturn))3 e. How is the annual rate of return calculated in part d related to the goometric rate of return? When you are evaluating the performance of an investrient tikat fas? been held for several years, what type of average rate of return (arithmetic or geometric) should you use? Why? a. Enter the annual rate of return for each year for Harris in the table below. (Round to two decimal places.) b. The arithmetic average rate of return eamed by investing in Harris stock over this period is o. (Round to two docirnal places) The arithmetic average rate of return earned by investing in Pirwheel stock over this period is o. (Round to two deo mall placos). The goometric avorage rate of return earned by investing in Harris stock over this period is \%. (Round to fwo decimal places.) The goometric avorage rato of return earned by investing in Pirwheel stock over this period is \%. (Round to fwo decimal places.): c. The three-year rate of return spanning the entire period for Harris is \%. (Round to two docimal places.) The three-year rate of return spanning the entire period for Pinwheel is \%. (Round to two decimal places.) d. The annual rate of return converted from the three-year rate in part c for Harris is \%. (Round to two decimal places.) d. The annual rate of return corverted from the threeyeat rate in part c for Hartis is: W. (Pound to two decimal places.) The annual rate of return converted from the three-year rate in part c for Pinwheel is K. (Round to two decittal places.) When you are evaluating the performance of an imvestment that has been hold for soveral years, what fype of average rate of moum (aritherebc cr poomelre) sho fid you use? Why? (Soloct the best choice below.) A. Geometric average return better doscribes the avorage annual rate of retum over a period because it is a triple average, so it answers the questico concerning the expoctod rate of return over a period. B. Arithrivelic average roturn botter describes the average annual rate of refurn over a period bocause is is a timple avecage, so it anssurs the idestson concerning the oxpected rate of rotuin over-a period. C. The arithmetic rate of return should be used. It better describes the averago anneal rate of retum oves a period bocasuse it conoounds as the same rafe While the goometric rate of return is best used for a single period. D. The goorrotric rate of refum should be used. It better describes the average ansual rate of retum owor a period bocause it compounds at the same tate whice the arithmetic rate of retum is best used for a singlo period. Data table