Over the Past Fifteen Years,the Common Stock of the Flower

question 9

Multiple Choice

Over the past fifteen years,the common stock of The Flower Shoppe,Inc.has produced an arithmetic average return of 12.2 percent and a geometric average return of 11.5 percent.What is the projected return on this stock for the next five years according to Blume's formula?

• A)11.70 percent
• B)11.89 percent
• C)12.00 percent
• D)12.03 percent
• E)12.12 percent

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Definitions:

Preceding Year

Refers to the year that immediately comes before the current year in context.

Common-sized Balance Sheet

A balance sheet where each line item is expressed as a percentage of total assets, facilitating comparison across companies and time periods.

Trend Balance Sheet

A financial statement that shows the changing balances of each account over a series of periods, helping in analyzing trends over time.

Comparative Balance Sheet

A financial statement that presents the assets, liabilities, and equity of a company at different points in time for comparison.