Suppose the Quarterly Arithmetic Average Return for a Stock Is

question 28

Multiple Choice

Suppose the quarterly arithmetic average return for a stock is 10% per quarter and the stock gives a return of 15% each over the next two quarters. The arithmetic average return over the six quarters is ________.

• A) 15.17%
• B) 11.67%
• C) 12.83%
• D) 16.33%

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Definitions:

Interest Rate

The chunk of a loan taken as interest by the borrower, typically outlined as an annual percentage of the loan's outstanding balance.

Surplus

A situation where the quantity of a good or service supplied exceeds the quantity demanded at the current price, often leading to downward pressure on prices.

Loanable Funds

Loanable funds refer to the money available for borrowing in the financial markets, composed of savings from households and businesses plus any government surplus.

Interest Rate

The percentage at which interest is charged or paid on borrowed or saved money, often expressed as an annual percentage rate.