Calculating geometric and arithmetic average rate of return

Assignment Help Finance Basics
Reference no: EM131953130

Question: Calculating the geometric and arithmetic average rate of return. 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

1 $16

2 $12

3 $10

4 $20

5 $28

a. Calculate the annual rate of return for each year from the above information.

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 return earned by investing in Brangus Cattle Company's stock over this period?

d. Which type of average rate of return best describes the average annual rate of return earned over the period (the arithmetic or geometric) Why?

Reference no: EM131953130

Questions Cloud

What is the price of a share of stock : What is the price of a share of stock if the firm does not undertake the new investment? (Do not round intermediate calculation and round your final answer.
What is the sensitivity of npv to changes in sales figures : Break even point base-case flow and npv what is the sensitivity of NPV to changes in the sales figures.
What is the current stock price : A call option is currently selling for $2.50. It has a strike price of $30 and five months to maturity. A put option with the same strike price sells for $7.60.
How does your organization work to improve customer service : Define customer service (how you understand customer service) How does your organization work to improve customer service ?
Calculating geometric and arithmetic average rate of return : Calculating the geometric and arithmetic average rate of return. The common stock of the Brangus Cattle Company had the following end-of-year stock prices.
Company has higher return on equity : Dupont Analysis: Company A and Company B each had a return on assets (ROA) of 7.5% in 2017. Company A has a higher return on equity (ROE) than Company B.
What is estimate of the cost of capital : What is an estimate of the cost of capital (WACC) of the company?
What is an estimate of the cost of capital of the com : What is an estimate of the cost of capital (WACC) of the company?
Calculate the weighted average flotation cost : Calculate the weighted average cost of capital and the weighted average flotation cost for a company with the following data.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd