You Own a Stock That Has Produced an Arithmetic Average

question 87

Multiple Choice

You own a stock that has produced an arithmetic average return of 7.8 percent over the past five years.The annual returns for the first four years were 16,11,-19,and 3 percent,respectively. What was the rate of return on the stock in year five?

• A)-5.00 percent
• B)2.75 percent
• C)6.25 percent
• D)28.00 percent
• E)32.00 percent

Interpret utility functions and their implications for decision-making under uncertainty.

Analyze the impact of diversification on reducing investment risk.

Compare and contrast different investment options based on their risk and return profiles.

Understand the principles of moral hazard and adverse selection in financial markets.