Question

he historical stock prices and dividend payments for aMadeUPstock are provided below.

Date	Price ($)	Dividend ($)
Jan 2017	83.62	0.00
Jan 2018	89.91	0.40
Jan 2019	84.55	0.40
Jan 2020	92.50	0.40

Using the information provided above, what is the arithmetic mean return (inclusive of dividends)?

Answer 1

COL 1	COL II	COL III	COL IV	COL V
Date	Price($)	Dividend($)	Price + Dividend	%change
Jan-17	83.62	0	83.62
Jan-18	89.91	0.4	90.31	8%
Jan-19	84.55	0.4	84.95	-6%
Jan-20	92.5	0.4	92.9	10%
			AVERAGE	4.12%

STEP 1: Add values of COL II & COL III in COL IV (Price + Dividend)

STEP 2: Calculate %age change in prices in COL V. For example, for %change in JAN -18, use the expression [(COL IV value of Jan 2018 / COL II value of Jan 2017) - 1] or [(90.31/83.62)-1]. Similarly for others as well.

STEP 3: Find the average of COL V values using excel AVERAGE function or simply adding all COL V values and dividing it by the no. of terms to get arithmetic mean.