Please answer them in typed thanks 3 The table below gives t

Please answer them in typed. thanks.

3. The table below gives the price of a stock at the end of each of the last ten years (assume no dividends). a. What is the arithmetic average annual return on the stock? b. What is the geometric average annual return on the stock? c. What is the annual HPR on the stock?

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

$100 $70 $70 $90 $100 $125 $130 $150 $130 $90

Solution

Average return = sum of returns/9 = 1.107%

Geometric average return = ((1-0.3)*(1+0.00%)+(1+0.28571)........(1-0.30769))^1/9 -1 = -1.64%

HPR = (90/100)^1/9 - 1 = -1.16%