The price of a stock for Years 1 through 4 was $23.19,$24.00,$23.18,and $24.86,respectively.The stock paid dividends per share of $.23,$.24,and $.25 for Years 2 through 4,respectively.What is the geometric average rate of return for the period?
A)3.2%
B)3.4%
C)3.6%
D)3.8%
E)4.0%

Question

Quizplus · Accepted Answer

Geometric return = ({1 + [($24.00 - 23.19 + .23)/$23.19]} × {1 + [($23.18 - 24.00 + .24)/$24.00]} × {1 + [($24.86 - 23.18 + .25)/$23.18]})^1/3 - 1 = .034,or 3.4%

The Price of a Stock for Years 1 Through 4