The returns for AhhChocolate.com over the last 5 years are given below. Assuming no dividends were...

The returns for AhhChocolate.com over the last 5 years are given below. Assuming no dividends were paid, what is the 5-year “average” Holding Period (Geometric) Return for AhhChocolate? Year 1 return = 5.3% Year 2 return = - 4.6% Year 3 return = - 3.2% Year 4 return = 1.2% Year 5 return = 3.5%

A) 0.368%

B) 3.550%

C) 8.400%

D) 2.200%

E) 0.440%

Solutions

Expert Solution

Holding period return=[(1+rate 1)(1+rate 2)(1+rate 3)(1+rate 4)(1+rate 5)]^(1/5)-1

=[(1+0.053)(1-0.046)(1-0.032)(1+0.012)(1+0.035)]^(1/5)-1

which is equal to

=0.368%(Approx)

jeff jeffy answered 2 years ago

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