A stock had the following prices and dividends.What is the geometric average return on this stock?
A)3.2%
B)3.4%
C)3.6%
D)3.8%
E)4.0%

Question

A stock had the following prices and dividends.What is the geometric average return on this stock? 
A)3.2% 
B)3.4% 
C)3.6% 
D)3.8% 
E)4.0%

Quizplus · Accepted Answer

Return for year 2 = ($24.90 - $23.19 + $.23)F1F1F1S1F1F1F10 $23.19 = 8.3657%;Return for year 3 = ($23.18 - $24.90 + $.24)F1F1F1S1F1F1F10 $24.90 = -5.9438%;Return for year 4 = ($24.86 - $23.18 + $.25)F1F1F1S1F1F1F10 $23.18 = 8.3261%;Geometric return = (1.083657 F1F1F1S1F1F1F10 .940562 F1F1F1S1F1F1F10 1.083261)^.3333 - 1 = 3.4%

A Stock Had the Following Prices and Dividends