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A stock has had the following year-end prices and dividends: Year Price Dividend 1 $ 43.27 - 2 48.25 $ 0.45 3 57.17 0.48 4 45.25 0.60 5 52.17 0.65 6 61.25 0.73 What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) Arithmetic return ?? % Geometric return ?? %
A stock has had the following year-end prices and dividends: Year Price Dividend 1 $ 43.27 - 2 48.25 $ 0.45 3 57.17 0.48 4 45.25 0.60 5 52.17 0.65 6 61.25 0.73 What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) Arithmetic return ?? % Geometric return ?? %
Final answer:To calculate the arithmetic return of a stock, perform a yearly return calculation and average the results. For the geometric return, use the formula for compoundinginvestmentreturns. Both types of return calculations are essential for understandingstockbehavior.Explanation:To determine thearithmetic return, you first need to calculate the return for each year. The formula to calculate the yearly return is [(Price Year n - Price Year n-1)+ Dividend] / Price Year n-1. Perform this calculation for each year and then sum all the results and divide them by the number of years.Thegeometric return, also known as the compounded rate of return, takes into account the effects of compounding investment returns. The formula is [(P(t)/P(0))^(1/t)] - 1 where P(t) is the price at the end of the period and P(0) is the price at the start of the period.Both types of returns are essential in understanding the behavior of aspecificstock and both capture slightly different aspects of return dynamics.Learn more aboutStock Returnshere:brainly.com/question/34585091#SPJ11...