Exhibit 1-3
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
The common stock of XMen had the following historic prices. $$\begin{array} { l l }
\text { Time } & \text { Price of XMen } \
\hline 3 / 01 / 2004 & 50.00 \
3 / 01 / 2005 & 47.00 \
3 / 01 / 2006 & 76.00 \
3 / 01 / 2007 & 80.00 \
3 / 01 / 2008 & 85.00 \
3 / 01 / 2009 & 90.00
\end{array}$$
-Refer to Exhibit 1-3. What was your arithmetic mean annual yield for the investment in XMen?
A) 0.1462
B) 0.1247
C) 1.8
D) 0.40
E) 0.25

Question

Exhibit 1-3
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
The common stock of XMen had the following historic prices. $$\begin{array} { l l } 
\text { Time } & \text { Price of XMen } \
\hline 3 / 01 / 2004 & 50.00 \
3 / 01 / 2005 & 47.00 \
3 / 01 / 2006 & 76.00 \
3 / 01 / 2007 & 80.00 \
3 / 01 / 2008 & 85.00 \
3 / 01 / 2009 & 90.00
\end{array}$$
-Refer to Exhibit 1-3. What was your arithmetic mean annual yield for the investment in XMen?
A) 0.1462
B) 0.1247
C) 1.8
D) 0.40
E) 0.25

Quizplus · Accepted Answer

The arithmetic mean annual yield is calculated by taking the average of the annual returns. The annual returns are calculated by taking the difference between the price at the end of the year and the price at the beginning of the year, and then dividing by the price at the beginning of the year. The average of the annual returns is then calculated by taking the sum of the annual returns and dividing by the number of years. In this case, the annual returns are:2005: (47.00 - 50.00) / 50.00 = -0.062006: (76.00 - 47.00) / 47.00 = 0.61702007: (80.00 - 76.00) / 76.00 = 0.05262008: (85.00 - 80.00) / 80.00 = 0.06252009: (90.00 - 85.00) / 85.00 = 0.0588The average of the annual returns is:(0.6170 + 0.0526 + 0.0625 + 0.0588) / 5 = 0.1462Therefore, the arithmetic mean annual yield is 0.1462.

Exhibit 1-3 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

Exhibit 1-3
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)