What is the arithmetic average rate of return

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Reference no: EM132315308

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

ime Caswell 1 $12 2 9 3 7 4 6 5 12 -Calculate the annual 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)?

Reference no: EM132315308

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