Amazon.com stock prices gave a realized return of 5%,-5%,10%,and -10% over four successive quarters.What is the annual realized return for Amazon.com for the year?
A)-1.25%
B)2.50%
C)0.00%
D)1.25%
E)1.00%

Question

Quizplus · Accepted Answer

The annual realized return can be calculated by multiplying the returns of each quarter, considering each return as a growth factor (1 + return), and then subtracting 1 to convert back to a percentage. So, the calculation is as follows: (1 + 0.05) * (1 - 0.05) * (1 + 0.10) * (1 - 0.10) - 1 = (1.05 * 0.95 * 1.10 * 0.90) - 1 ≈ 0.9875 - 1 = -0.0125 or -1.25%.

AmazonCom Stock Prices Gave a Realized Return of 5%,-5%,10%,and -10