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Calculate the average rate of return

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Caswell Enterprises had the following end-of-year stock prices over the last five years and paid no dividends.

TimeCaswell1$1229374658

  • Calculate the average rate of return for each year from the above information.
  • What is the arithmetic average rate of return earned by investing in Caswell's stock over this period?
  • What is the geometric average rate of return earned by investing in Caswell's stock over this period?
  • Considering the beginning and ending stock prices for the five-year period are the same, which type of average rate of return best describes the annual rate of return earned over the period (arithmetic or geometric)?
  • The annual rate of return at the end of year 3 is what percent?

Reference no: EM131483047

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