Question

Suppose you buy 2000 shares of Air NZ at the beginning of year 1 for $8....

Suppose you buy 2000 shares of Air NZ at the beginning of year 1 for $8. Air NZ pays no dividends. The stock price at the end of year 1 is $10, $12 at the end of year 2, and $15 at the end of year 3. The stock price declines to $10 at the end of year 4, and you sell your 2000 shares. For the four years, your geometric average return is closest to

Select one:

a. 0.0%.

b. 1.0%.

c. 5.7%.

d. 9.2%.

e. 34.5%.

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Answer #1

Answer is c) 5.7%

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