Question: The Diagonal Stamp Company, which sells used postage stamps to collectors, advertises that its average price has increased from $1 to $5 in the last

The Diagonal Stamp Company, which sells used postage stamps to collectors, advertises that its average price has increased from $1 to $5 in the last 5 years. Thus, management states, investors who had purchased stamps from. Diagonal 5 years ago would have received a 100% rate of return each year.

(a) To check their calculations, compute the annual rate of return.

(b) Why is your computed rate of return less than 100%?

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