Question 3 1 pts XYZ stock price and dividend history are as

Question 3 1 pts XYZ stock price and dividend history are as follows: Year Beginning-of-year Price Dividend paid at Year-End 2010 $100 2011 $110 2012 $90 2013 $95 What is the arithmetic average rate of return for the period from the beginning of 2010 to the end of 2012? Your answer should be in percentages and accurate to the hundredths $4 $4 2.45 O 3.15 O 2.95 O 2.87 Question 4 1 pts Use the same information as given in Question#3 and compute the geometric average rate of return. Your answer should be in percentages and accurate to the hundredths. O 2.02 O 1.87 O 2.33 O 2.12

Solution

3. Return for 2010= (110-100+4)=$14= $14/$100*100= 14%

  Return for 2011= (90-110+4)=-$16= -$16/$110*100= -14.55%

Return for 2012= (95-90+4)=$9= $9/$90*100= 10%

Hence airthmetc average return = (+14-14.55+10)/3= 3.15%

4. Geometric mean=((1+return in 2010)*(1+return in 2011)*(1+return in 2012))^1/3)-1

=(1.14*85.45*1.1)^1/3-1=2.33%

5 At 2010 , -$100*3=-$300, at 2011 - $110*2+$12= -$208, AT 2012 +$90*1+16= $ 106 at 2013 +$95*4 =$ 380

-300+ -208/(1+r)+106/(1+r)^2+ $380/(1+r)^3= 0

Thus -17 % is the answer.