Problem 3 (9 pts) Consider the rate of return on Stock A and Stock B below:...

Transcribed Image Text:

Problem 3 (9 pts) Consider the rate of return on Stock A and Stock B below: Year 2019 2020 2021 TA 10% - 15% 8% ГВ 8% -5% 6% a. Calculate the arithmetic average returns for stock A and stock B over the 3 years sample period. (2pts) b. Calculate the geometric average returns for stock A and stock B over the 3 years sample period. (2pts) c. What is the expected rate of return for stock A and stock B. (1pt) d. What will be the value of $100 by the end of 2021 if invested in stock A at the beginning of 2019? (2pts) e. What will be the value of $100 by the end of 2021 if invested in stock B at the beginning of 2019? (2pts) Problem 3 (9 pts) Consider the rate of return on Stock A and Stock B below: Year 2019 2020 2021 TA 10% - 15% 8% ГВ 8% -5% 6% a. Calculate the arithmetic average returns for stock A and stock B over the 3 years sample period. (2pts) b. Calculate the geometric average returns for stock A and stock B over the 3 years sample period. (2pts) c. What is the expected rate of return for stock A and stock B. (1pt) d. What will be the value of $100 by the end of 2021 if invested in stock A at the beginning of 2019? (2pts) e. What will be the value of $100 by the end of 2021 if invested in stock B at the beginning of 2019? (2pts)

Answer rating: 100% (QA)

Step 14 arithmetic average sum of returns number of obs... View the full answer