The geometric average daily return for Grumpy Inc.was 3 percent for this past week.Grumpy's stock was traded at $18.82 when the market closed on Friday.The daily returns for Monday through Thursday are 5 percent,2 percent,-10 percent,and 8 percent,respectively.What is the opening price of Grumpy on Friday?
A) $16.68
B) $16.90
C) $16.94
D) $17.11

Question

Quizplus · Accepted Answer

Compute Friday return (1+3%)⁵/((1+5%)*(1+2%)+(1-10%)-(1+8%))-1 = 11.36%
Friday's opening is (100% - 11.36%)x $18.82 = $16.68

The Geometric Average Daily Return for Grumpy Inc