Question

Over a 50 year period an asset had an arithmetic return of 12.1 percent and geometric...

Over a 50 year period an asset had an arithmetic return of 12.1 percent and geometric return of 10 percent.
Musing Blume’s formula, what is your best estimate of the future annual returns over 10 years? 15 years? 25 years?


Homework Answers

Answer #1

Blume's Formula -

where, T = No. of forecast/ future years, N = no. of historic/ observed periods

T = 10 years

or 11.71%

T = 15 years

%

T = 25 years

or 11.07%

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You have found an asset with an arithmetic average return of 13.90 percent and a geometric...
You have found an asset with an arithmetic average return of 13.90 percent and a geometric average return of 10.50 percent. Your observation period is 50 years. What is your best estimate of the return of the asset over the next 5 years? 10 years? 20 years?
You have found an asset with an arithmetic average return of 13.60 percent and a geometric...
You have found an asset with an arithmetic average return of 13.60 percent and a geometric average return of 10.44 percent. Your observation period is 30 years. What is your best estimate of the return of the asset over the next 5 years? 10 years? 20 years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Consider the following five monthly returns. The arithmetic average monthly return over this period is 1.40​%...
Consider the following five monthly returns. The arithmetic average monthly return over this period is 1.40​% and the geometric average monthly return over this period is 1.33​%. Explain the difference between the arithmetic average return and the geometric average return. Are both numbers​ useful? If​ so, explain​ why? 3​% -1​% 2​% 7​% -4​% Choose the correct answer below. Both numbers are useful. The geometric average return tells you what you would actually make if you held the stock over this...
Suppose that, from 25 years of annual returns data, we calculate an arithmetic average return of...
Suppose that, from 25 years of annual returns data, we calculate an arithmetic average return of 12 percent and a geometric average of 9 percent. Calculate average return forecasts 1 year, 5-year, and 10 year into the future.
Over the 10 year period from 2001-2018, the geometric average return for APPLE was 8.2 %...
Over the 10 year period from 2001-2018, the geometric average return for APPLE was 8.2 % and the arithmetic average return was 9.25 %. Compute average return forecasts for 1, 3, 7, 10, and 20 years into the futures.
A stock had returns of 15 percent, 14 percent, 18 percent, 5 percent, 16 percent, and...
A stock had returns of 15 percent, 14 percent, 18 percent, 5 percent, 16 percent, and 2 percent over the last six years. What is the arithmetic return for the stock? What is the geometric return for the stock?
A stock has had returns of 12 percent, 19 percent, 21 percent, 21 percent, -12 percent,...
A stock has had returns of 12 percent, 19 percent, 21 percent, 21 percent, -12 percent, 26 percent, and -5 percent over the last six years. What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places.) a.) Arithmetic return? b) Geometric return?
A stock has annual returns of 7.4 percent, 15.8 percent, -16.4 percent, 12.1 percent, and 22.2...
A stock has annual returns of 7.4 percent, 15.8 percent, -16.4 percent, 12.1 percent, and 22.2 percent for the past five years. What is the geometric average return for the period is _____ percent. Show your answer to the nearest .01%, do not use the % sign in your answer. If the answer is negative, use the - sign.
 The common stock of the Brangus Cattle Company had the following​ end-of-year stock prices over the...
 The common stock of the Brangus Cattle Company had the following​ end-of-year stock prices over the last five years and paid no cash​ dividends: Time   Brangus Cattle Company 1   $17 2   $12 3   $13 4   $21 5   $26 a.  The annual rate of return at the end of year 2 is ___% b.  What is the arithmetic average rate of return earned by investing in Brangus Cattle​ Company's stock over this​ period? c.  What is the geometric average rate of...
A stock had returns of 16 percent, 12 percent, 19 percent, 17 percent, 18 percent, and...
A stock had returns of 16 percent, 12 percent, 19 percent, 17 percent, 18 percent, and -1 percent over the last six years.    What is the arithmetic return for the stock?    What is the geometric return for the stock?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT