The Return Pattern on Your Favorite Stock Has Been 5

question 47

Multiple Choice

The return pattern on your favorite stock has been 5.39 percent,8.26 percent,−12.04 percent,and 14.27 percent over the last four years.What are the average arithmetic and geometric rates of return?

• A)3.45 percent; 3.21 percent
• B)3.97 percent; 3.48 percent
• C)3.88 percent; 3.64 percent
• D)3.92 percent; 3.56 percent
• E)3.51 percent; 3.26 percent

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Definitions:

Capital Accounts

Accounts that represent the initial and subsequent investments of owners in a business, adjusted for any profits or losses.

Profit Sharing

A company policy of distributing a portion of net profits to its employees as a form of bonus or additional compensation.

Net Assets

This represents the difference between a company's total assets and total liabilities, indicating the owner's equity.

Net Income

The net income of a company calculated by deducting all costs, taxes, and expenses from its total revenue.