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Understanding the Approximate Expected Return Equation The formula for the approximate expected return of an investment can look intimidating, but it's really just a function of three things: (1) average annual current income, (2) average capital gains, and (3) the average value of the investment. Based on the information in the table, compute each of these values for the two stocks over a 3-year period and enter the values into the bottom half of the table. Stock 1 Stock 2 Average annual dividends (over three years) $1.35 $3.05 Current stock price $55 $106 Projected future stock price (in three years) $67 $135 Average annual current income (C) 5 Average annual capital gains (CG) 5 Average value of the investment (VI) Next, derive the correct formula for approximate expected return by correctly arranging these three variables In the equation that follows Approximate Expected Return = Using this formula, you can see that the approximate expected return for Stock 1 is and the approximate expected return for Stock 2 isStock 1 Stock 2 Average annual dividends (over three years) $1.35 $3.05 Current stock price $55 $106 Projected future stock price (in three years) $67 $136 Average annual current income (CI) 5 S Average annual capital gains (CG) Average value of the investment (VI) 0.07%% Next. derive the correct formula for approximate expected return by correctly arrand 0.02% three variables in the equation that follows. 15.59% 8.77%% Approximate Expected Return- 10.79% Using this formula, you can see that the approximate expected return for Stock 1 is and the approximate expected return for Stock 2 Is True or False: For these investments to be equally attractive, Stock I must carry lower risk than Stock 2. Trog OfFalseStock 1 Stock 2 Average annual dividends (over three years) $1.35 $3.05 Current stock price $55 $106 Projected future stock price (in three years) $67 $136 Average annual current income (CI) 5 Average annual capital gains (CG) Average value of the investment (VI) 5 0.089% the correct formula for approximate expected return by correctly arranging these three variables in the equation that follows. 8.77%% 10.796 12 4710 ce Expected Return 0.0356 ormula, you can see that the approximate expected return for Stock 1 is and the approximate expected return for Stock 2 is True or False: For these investments to boxequally attractive, Stock 1 must carry lower risk than Stock 2. True False