What is the geometric average return on the stock

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Question - Company Name= Meta (Facebook) 

1. If markets are efficient, explain whether actual returns on your stock can be higher or lower next year than the current expected return on 8.68%

2. If the return on your stock equals the expected return indicated by the CAPM next year and then suffers a return of negative 98% in the subsequent year, show what is the geometric average return on the stock over those two years (i.e., the compounded annual return)? 

3. If the market portfolio unexpectedly goes down 20% (i.e., there is a -20% return on the aggregate market of stocks and other securities in existence), what return would likely occur on your stock?

Reference no: EM133116257

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