(Solving a comprehensive problem) Use tge end-of-year stock price, to answer the following questions for Pinwheel and harris companies.

a. Compute the annual rates of return for each time period 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 from part a. (note/ you may assume that neither firm pays any dividends.)

c. compute a three year rate of return soanning the entire period (i.e. using the ending price for period 1 and ending price for period 4.)

d. since the rate of return calculated un part c is a three year rate of return, convert it to an annual rate of return by using the following equation: (1+ 3 year rate of return) = (1+ annual rate of return)^3

e. how is the annual rate of return calculated in part d related ti the geometric rate of return? when you are evaluating the performance if an investment that has been held for several years, what type of average rate of return (arithmetic or geometric) should you use? why ?

time Harris Pinwheel

1 $9 $19

2 10 33

3 11 28

4 15 23