Suppose the Quarterly Arithmetic Average Return for a Stock Is

question 91

Multiple Choice

Suppose the quarterly arithmetic average return for a stock is 5% per quarter and the stock gives a return of 10% each over the next two quarters.The arithmetic average return over the six quarters is:

• A)9%
• B)6.67%
• C)7.5%
• D)10%
• E)12%

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Definitions:

Underwriting Spread

The difference between the price at which underwriters purchase securities from the issuer and the public offering price set for the securities.

Rights Offering

A corporate action where a company offers existing shareholders the right to buy additional shares at a discount before offering them to the public.

Stock Outstanding

The total number of shares of a corporation that have been issued and are currently owned by investors, including public shareholders and company insiders.