(Solving a comprehensive problem) Use the end-of-year stock price data in the popup Window, to answer the following questions for the Harris and Pinwheel companies. . 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 from parta (Note: you may assume that neither firm pays any dividends.) C. Compute 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 partc is a three-year rate of return convert it to an annual rate of return by using the following equation Three-Year Rate of Return .-( = 1+ 1. Annual Rate of Return 1 6. How is the annual rate of retum calculated in part d related to the geometnc rate of return? When you are evaluating the performance of an investment that has been held for several years, what type of average rate of return (anthmatic 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.) Value of Time Annual Rate Value of Annual Rato Harris Stock of Return Pinwheel Stock of Return 1 59 $19 2 6 32 3 12 31 4 16 % 26 Enter the annual rate of return for each year for Pinwheel in the table below. (Round to two decimal places) ) Value of Time Annual Rate Value of Annual Rate Hamis Stock of Return Pinwheel Stock of Return 1 89 $19 2 - 33.33% 32 3 12 100.00% 31 4 16 33.33% 26 Data table Time Harris Pinwheel 1 59 519 2 2 6 32 3 12 31 4 16 26 (Click on the icon in order to copy its contents into a spreadsheet) ( Print b . The arithmetic average rate of return earned by investing in Harris stock over this period is % (Round to two decimal places.) ) The arithmetic average rate of return earned by investing in Pinwheel stock over this period is. (Round to two decimal places.) The geometric average rate of return earned by investing in Harris stock over this period is. Round to two decimal places) The geometric average rate of return carned by investing in Pinwheel stock over this periodis (Round to two decimal places) ) C. The three-year rate of return spanning the entire period for Harris is %. (Round to two decimal 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 partc for Harris is (Round to two decimal places) The annual rate of return converted from the three-year rate in perte for Pinwheel is %. (Round to two decimal places. e. How is the annual rate of retum calculated in part d related to the geometric rate of return? (Select the best choice below.) Done O A. The annual rate of return calculated in part d is nothing but the arithmetic average rate of return calculated in a different way. OB. The annual rate of return calculated in part d is nothing but the geometric average rate of return calculated in a different way OC. The annual rate of return calculated in part d is not related to the geometric average rate of return OD. The annual rate of return calculated in part d is the same as the geometric rate of return in this problem but this is only a coincidence. When you are evaluating the performance of an investment that has been held for several years, what type of average rate of retum arithmetic or geometric) should you use? Why? (Select the best choice below) O A. Geometric average return belter describes the average annual rate of return over a period because it is a simple average, soit answer the question concerning the expected rate of return over a period O B. Arithmetic average return better describes the average annual rate of return over a period because it is a simple average, so it answer the question concerning the expected rate of return over a period OC. The arithmetic rate of return should be used. It better describes the average annual rate of return over a period because I compounds at the same rate while the geometric rate of return is best used for a single period. OD. The geometric rate of return should be used. It better describes the average annual rate of return over a period because it compounds at the same rate while the arithmetic rate of return is best used for a single period