Question

Amazon stock prices gave a realized return of 15​%, 12​%, 12​%, and 15​% over four successive quarters. What is the annual realized return for Amazon for the​ year?

Answer 1

Annual realized rate = 0.135 or 13.5%

Step-by-step explanation:

The annual realized return on the stock can be calculated by taking the weighted average of the quarterly realized returns provided by the stock. As the returns are quarterly, each return will be allocated a weight of 1/4 or 0.25 or 25%. Thus, the annual realized rate will be,

Annual Realized rate = 0.25 * 0.15 + 0.25 * 0.12 + 0.25 * 0.12 + 0.25 * 0.15

Annual realized rate = 0.135 or 13.5%