Question

5) (3 pts) Given the stock prices for DD at the end of the year, calculate the % return for for 2015, 2016, 2017, and 2018. 2014 $120 2015 $130 /1 % 2016 $134 % 2017 $131 2018 $139 % stock BB what was the arithmetic average annual return from 2014 to 2018? (2 pts) At the end of 2014 you invested $5000 into a mutual fund. You invested another $3,000 into the mutual fund at the end of 2015. You did not invest any money in 2016 or 2017 and by the end of 2018, the mutual fund investment was worth $11,900. What was the dollar weighte average annual return on your investment? 6) (2 pts) An investment had an average return of 15% and a standard deviation of 20% over the last 100 years. Assuming the investment had a normal distribution, how many of the 100 year did the investment lose more than 5%? 7) years

Answer 1

Answer to Question No. 5

Return for 2015 = ($130 - $120) / $120 * 100
Return for 2015 = 8.33%

Return for 2016 = ($134 - $130) / $130 * 100
Return for 2016 = 3.08%

Return for 2017 = ($131 - $134) / $134 * 100
Return for 2017 = -2.24%

Return for 2018 = ($139 - $131) / $131 * 100
Return for 2018 = 6.11%

Arithmetic Average Annual Return = (8.33% + 3.08% -2.24% + 6.11%) / 4
Arithmetic Average Annual Return = 3.82%