The arithmetic average daily return for Dopey Inc.was 2 percent for this past week.Dopey's stock was traded at $23.70 when the market closed on Friday.The daily returns for Monday,Tuesday,Thursday,and Friday are 4.8%,5.6%,-4.0%,and 12.2%,respectively.What was Dopey's opening price on Monday?
A) $21.47
B) $21.55
C) $21.75
D) $22.80

Question

Quizplus · Accepted Answer

Compute Wednesday's return = (2%*5-4.8%-5.6%+4.0%-12.2% = -8.6%
Monday opening price = $23.70/(1+12.2%)*(1-4%)*(1-8.6%)*(1+5.6%)*(1+4.8%)= $21.75

The Arithmetic Average Daily Return for Dopey Inc