Question

4. Using annual stock price between 2013 and 2018, compute the following returns. For stock price data, use the closing price of last trading day of the year:

Ford Annual Stocks 2013-18
Date		Open	High	Low		Close*		Adj Close**			Volume
Dec 01, 2018		9.710	9.850	7.410		7.650			7.519		956,262,400
Dec 01, 2017		12.620	12.810	12.280		12.490			11.584		597,327,400
Dec 01, 2016		12.230	13.200	12.080		12.130			10.696		708,798,000
Dec 01, 2015		14.320	14.620	13.400		14.090			11.859		587,647,300
Dec 01, 2014		15.780	16.130	13.930		15.500			12.537		593,521,500
Dec 01, 2013		17.120	17.200	15.100		15.430			12.090		1,037,390,500
Honda Annual Stocks 2013-18
Date	Open		High	Low		Close*		Adj Close**			Volume
Dec 01, 2018	28.72		28.78	25.30		26.45		26.45			18,690,300
Dec 01, 2017	33.40		34.45	33.04		34.08		33.06			8,991,200
Jan 01, 2016	30.86		31.00	26.41		27.02		24.65			17,342,400
Dec 01, 2015	33.18		33.42	31.18		31.93		28.96			10,742,600
Dec 01, 2014	30.39		31.25	28.83		29.52		26.16			33,897,100
Dec 01, 2013	42.35		42.47	39.81		41.35		35.83			5,439,600

1) Arithmetic Average Return5. Using annual stock price between 2013 and 2018, compute the following returns. For stock price data, use the closing price of last trading day of the year:

r1 + r2 + r3 + r4 / 5

Honda:

Ford:

2) Geometric Average Return

(1 + rg) 4 = (1 + r1) x (1 + r2) x (1+r3) x (1 + r4)

Honda:

Ford:

3) Holding Period Return

(1 + r1) x (1 + r2) x (1+r3) x (1 + r4) - 1

Honda:

Ford:

4) 2-year forecast Return

R(T) = (T-1 / N-1) x Geometric Average + (N-T / N-1) x Arithmetic Average

Honda:

Ford:

5) 3-year forecast Return

R(T) = (T-1 / N-1) x Geometric Average + (N-T / N-1) x Arithmetic Average

Honda:

Ford:

Answer 1

To calculate return of each year : return = (current closing price - last year's closing price )/ last year's closing price

Using excel returns for ford and honda are as follows:

To calculate respective metrics following formulae were used in excel :