A Stock Had Returns of 12 Percent,6 Percent,13 Percent,−11 Percent,and

question 44

Multiple Choice

A stock had returns of 12 percent,6 percent,13 percent,−11 percent,and −2 percent over the past five years.What is the geometric average return for this time period?

• A)3.60 percent
• B)3.19 percent
• C)3.29 percent
• D)3.62 percent
• E)4.40 percent

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Definitions:

Stock Dividend

A distribution of additional shares of a company to its shareholders instead of paying dividends in cash.

Stock Split

A corporate action by a company to divide its existing shares into multiple ones to boost the liquidity of the shares, often done when share prices are high.

Paid-In Capital

Total amount of cash and other assets paid into the corporation by stockholders in exchange for capital stock.

Stock Dividend

A company rewards its shareholders with extra shares, foregoing the option to distribute cash.