A stock had the following prices and dividends.What is the geometric average return on this stock? $$\begin{array}{l}
\underline { \text { Year } } \text { Price Dividend }\
\begin{array} { c c c }
1 & \$ 16.40 & - \
2 & \$ 16.10 & \$ 0.50 \
3 & \$ 15.48 & \$ 0.50 \
4 & \$ 9.15 & \$ 0.75
\end{array}
\end{array}$$

Question

A stock had the following prices and dividends.What is the geometric average return on this stock? $$\begin{array}{l}
\underline { \text { Year } } \text { Price Dividend }\
\begin{array} { c c c } 
1 & \$ 16.40 & - \
2 & \$ 16.10 & \$ 0.50 \
3 & \$ 15.48 & \$ 0.50 \
4 & \$ 9.15 & \$ 0.75
\end{array}
\end{array}$$

Quizplus · Accepted Answer

Return for year 2 = ($16.10 - $16.40 + $0.50)/$16.40 = 1.2195 percentReturn for year 3 = ($15.48 - $16.10 + $0.50)/$16.10 = -0.7453 percentReturn for year 4 = ($9.15 - $15.48 + $0.75)/$15.48 = -36.0465 percentGeometric return = (1.012195 × 0.9925472 × 0.639535)^1/3 - 1 = -13.71 percent

A Stock Had the Following Prices and Dividends A)-1587 Percent B)-13

A Stock Had the Following Prices and Dividends A)-1587 Percent
B)-13