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slava [35]
3 years ago
13

A stock has annual returns of 5 percent, 21 percent, -12 percent, 7 percent, and -6 percent for the past five years. The arithme

tic average of these returns is _____ percent while the geometric average return for the period is _____ percent.
Business
1 answer:
sergij07 [2.7K]3 years ago
8 0

Answer:

Arithmetic = 3%

Geometric = 2.37%

Explanation:

The arithmetic average of 'n' returns is given by:

A = \frac{\sum r_i}{n}

For five returns of 5% ,21%, -12%, 7%, and -6%:

A=\frac{0.05+0.21-0.12+0.07-0.06}{5}\\ A=0.03=3\%

The geometric average of 'n' returns is given by:

G=\sqrt[n]{(1+r_1)*(1+r_2)*...*(1+r_n)}-1

For five returns of 5% ,21%, -12%, 7%, and -6%:

G=\sqrt[5]{(1+0.05)*(1+0.21)*(1-0.12)*(1+0.07)*(1-0.06)}-1\\G=0.0237=2.37\%

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8 0
2 years ago
Allison invested $23,000 in an account paying an interest rate of 6.7% compounded annually. Assuming no deposits or withdrawals
Vadim26 [7]

Answer:

18 years

Explanation:

Given that;

P= $23,000

A= $76,300

r= 6.7%

From

A = P(1 + r/100)^n

76,300 = 23,000 (1 + 0.067)^n

3.3 = (1.067)^n

Taking logarithm of both sides

log 3.3 = log (1.067)^n

log 3.3 = nlog(1.067)

n= log 3.3/log 1.067

n= 0.5185/0.0282

n= 18 years ( to the nearest year)

8 0
3 years ago
Government policymakers decided to reduce the rate of inflation from 3% to 1.6%. As a result, the unemployment rate increased fr
andreyandreev [35.5K]

Answer:

Government policymakers decided to reduce the rate of inflation from 3% to 1.6%. As a result, the unemployment rate increased from 4.8% to 6.2%. The sacrifice ratio is:______

d. none of the above

Explanation:

a) Data and Calculations:

Old inflation rate = 3%

New inflation rate = 1.6%

Old unemployment rate = 4.8%

New unemployment rate = 6.2%

Ratio of old inflation rate to old unemployment rate = 3 : 4.8 = 0.625

Ratio of new inflation rate to new unemployment rate = 1.6% : 6.2% = 0.258

Sacrifice ratio = Difference between the two ratios = 0.367 (0.625 - 0.258)

b) The sacrifice ratio is the difference between the old ratio and the new ratio of inflation rate to unemployment rate.

6 0
2 years ago
You wish to take an Excel course. You may enroll at one within your school or you may take a community class at the local librar
Paraphin [41]

Answer:

The chosen option (considering enrollment costs and opportunity cost) is:

b) College course.

Explanation:

a) Data and Calculations:

Costs/Benefits

                           College Course          Community Course

Cost                              $2,600                         $1,390

Opportunity costs         -2,080                          2,080

Net costs                         $520                        $3,470

Distance to course      0.40 miles                    16 miles

                                  (walking distance)      (driving distance)

Timing of course          Weekday                     Weekend

Number of meetings    16                                 8

b) With the College course option, you will earn $2,080 ($260 * 8) weekdays to offset part of the enrollment cost.  With the Community course option, $2,080 will be lost in opportunity cost, thereby increasing the total costs incurred.  These costs are apart from the driving costs associated with traveling 16 miles to the Community Course at the local library.

5 0
3 years ago
A company is preparing financial statements using IFRS for the first time for the year ended December 31, 2018. The "transition
8_murik_8 [283]

Answer:

E. January 1, 2017

Explanation:

Financial statements are prepared showing at least two years for the sake of comparability.

It will be important for the company in presenting its financial statement using the IFRS for the year ended December 31st 2018 to show the financial statements for the year ended 31st December 2017 as if it had always applied the IFRS.

The basic idea is to show in the financial statements the effects of adopting the IFRS from a preceding period in order for the entity to show the financial statement for 2017 and 2018 and be able to compare them having been prepared on the same basis.

Thus, the transition date will be the beginning of the preceding period when the IFRS was applied (1st Jan. 2017 oe 31st Dec. 2016).

I hope this explanation makes the concept easy to grasp.

Thank you.

7 0
3 years ago
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