Question

What is the total percentage return for an investor who purchased a stock for $6.35, received $3.38 in dividend payments, and sold the stock for $8.46?A stock has monthly returns of -6.66%, -0.69% , 5.1%, and -22.66%. What is the stock’s geometric average return?

Answer 1

The total percentage return for the investor is 33.23% and the geometric average return for the stock is -0.025%.

Step-by-step explanation:

To calculate the total percentage return for the investor, we need to find the difference between the selling price and the purchase price of the stock. The difference is $8.46 - $6.35 = $2.11. To find the percentage return, we divide this difference by the purchase price, and then multiply by 100%. So, the percentage return is ($2.11 / $6.35) * 100% = 33.23%.

To find the stock's geometric average return, we need to multiply each monthly return by itself and then take the nth root, where n is the number of months. For the given monthly returns of -6.66%, -0.69%, 5.1%, and -22.66%, we multiply them together to get (-0.0666)(-0.0069)(0.051)(-0.2266) = -0.000626363636..., and then take the square root of this value. The geometric average return is approximately -0.025%.