Question

Given the following share price history, what is the arithmetic average return per share? Year Share...

Given the following share price history, what is the arithmetic average return per share?

Year

Share price

1

$20

2

$22

3

$24

4

$26

5

$28

Select one:

a. 3.24%

b. 4.05%

c. 5.36%

d. 8.78%

e. 10.75%

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Homework Answers

Answer #1

From the given information, we can calculate the returns using excel as:

Excel formulas used:

The formula to calculate arithmetic average is:
=(Sum of all observations)/(Number of observations)
The returns as calculated from the share prices are 10.00%, 9.09%, 8.33% and 7.69%.
So, the number of observations =4
Arithmetic average return=(10.00% + 9.09% + 8.33% + 7.69%)/4
=(10.00% + 9.09% + 8.33% + 7.69%)/4
=35.11%/4
=8.78%

Answer: 8.78%

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