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CALCULATING THE GEOMETRIC AND ARITHMETIC AVERAGE RATE OF RETURN )

CALCULATING THE GEOMETRIC AND ARITHMETIC AVERAGE RATE OF RETURN )

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Author: Christine Farr
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Calculating the geometric and arithmetic average rate of return ) the common stock f the brangus Cattle company had the following end of year stock prices over the last 5 years no cash dividends.
Time                                    Brangus cattle company
1                                                                                $17
2                                                                                8
3                                                                                12
4                                                                                22
5                                                                                28
A)    Calculate the annual rate of return for each year from the above information
B)    What s the arithmetic average rate of return earned by investing in Brangus  cattle company stock over this period.
C)    What is the geometric average rate of return earned by investing in Brangus cattle stock period
D)    Which type of average rate of return best describe the average annual of return earned over the period ( arithmetic or geometric? Why
 
a)      The annual rate of return at the end of the year 2 is ..% ( round to two decinal)
The annual rate of return at the end of the year 3 is ..% ( round two decimal)
The annual rate of return at the end of the year 4 is ..% ( round two decimal)
The annual rate of return at the end of the year 5 is ..% ( round two decimal)
 

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