HomeworkLib
Question

You have found an asset with an arithmetic average return of 14.00 percent and a geometric...

You have found an asset with an arithmetic average return of 14.00 percent and a geometric average return of 10.52 percent. Your observation period is 50 years. What is your best estimate of the return of the asset over the next 5 years? 10 years? 20 years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Estimated Return
5 years %
10 years %
20 years %
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

4 Blume formula- Geometric mean Aritmethic mean Where T No of years to estimate the return N No of observed years 10.52% 14.00% Geometric mean Aritmethic mean 12 13 5 308.71 10 274.42 20 205.844 Blume formula T-1 N-1 N-T N-1 Geometric mean Where T No of years to estimate the retu N No of observed years 10 Geometric mean 11 Aritmethic mean 12 13 5 14 10 15 20 16 0.1052 0.14 -(A13-1)/(50-1))*SC$10+1(50-A13)(50-1))SC$11 -((A14-1)/(50-1)) $C$10((50-A14) (50-1)) $c$11 -((A15-1)/(s0-1)) $C$10+((50-A15) (50-1)) $C$11

0 0
Add a comment
Know the answer?
Add Answer to:
You have found an asset with an arithmetic average return of 14.00 percent and a geometric...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • You have found an asset with an arithmetic average return of 13.40 percent and a geometric...

    You have found an asset with an arithmetic average return of 13.40 percent and a geometric average return of 10.40 percent. Your observation period is 30 years. What is your best estimate of the return of the asset over the next 5 years? 10 years? 20 years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

  • You have found an asset with an arithmetic average return of 12.80 percent and a geometric...

    You have found an asset with an arithmetic average return of 12.80 percent and a geometric average return of 10.28 percent. Your observation period is 40 years. What is your best estimate of the return of the asset over the next 5 years? 10 years? 20 years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

  • Over a 48-year period an asset had an arithmetic return of 13.2 percent and a geometric...

    Over a 48-year period an asset had an arithmetic return of 13.2 percent and a geometric return of 11.1 percent. Using Blume’s formula, what is your best estimate of the future annual returns over 7 years? 13 years? 24 years? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

  • Over a 44-year period an asset had an arithmetic return of 11.8 percent and a geometric...

    Over a 44-year period an asset had an arithmetic return of 11.8 percent and a geometric return of 9.7 percent. Using Blume’s formula, what is your best estimate of the future annual returns over 7 years? 12 years? 22 years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Future annual returns 7 years % 12 years % 22 years %

  • Over a 40-year period, an asset had an arithmetic return of 11.2 perces and a geome...

    Over a 40-year period, an asset had an arithmetic return of 11.2 perces and a geome return of 9.4 percent Using Blume's formula, what is your best estimate of the future annu returns over 5 years? 10 years? 20 years? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 5 years 10 years 20 years . . .

  • 6) Over a 25-year period an asset had an arithmetic return of 13.1 percent and a geometric return of 12.6 percent....

    6) Over a 25-year period an asset had an arithmetic return of 13.1 percent and a geometric return of 12.6 percent. Using Blume's formula, what is your best estimate of the future annual returns over the next 10 years? A) 11.84 percent B) 13.04 percent C) 12.46 percent D) 11.18 percent E) 12.91 percent 6 7) Which one of the following statements is correct based on the period 1926-2016? A) The standard deviation of the annual rate of inflation was...

  • Suppose the returns on an asset are normally distributed The historical average annual return for the...

    Suppose the returns on an asset are normally distributed The historical average annual return for the asset was 76 percent and the standard deviation was 8.6 percent. What is the probability that your return on this asset will be less than 93 percent in a given year? Use the NORMDIST function in Excele to answer this question (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Probability What range of returns...

  • Calculating the geometric and arithmetic average rate of​ return)  The common stock of the Brangus Cattle...

    Calculating the geometric and arithmetic average rate of​ return)  The common stock of the Brangus Cattle Company had the following​ end-of-year stock prices over the last five years and paid no cash​dividends: Time Brangus cattle Comapny 1 ​$14 2 8 3 10 4 21 5 27 a.  Calculate the annual rate of return for each year from the above information. b.  What is the arithmetic average rate of return earned by investing in Brangus Cattle​ Company's stock over this​ period?...

  • (Calculating the geometric and arithmetic average rate of return) The common stock of the Brangus Cattle...

    (Calculating the geometric and arithmetic average rate of return) The common stock of the Brangus Cattle Company had the following end-of-year stock prices over the last five years and paid no cash dividends: Time Brangus cattle Comapny $15 11 24 28 a. Calculate the annual rate of return for each year from the above information b. What is the arithmetic average rate of return earned by investing in Brangus Cattle Company's stock over this period? c. What is the geometric...

  • Which of the following statement regarding the arithmetic mean and geometric mean is true? a) Arithmetic...

    Which of the following statement regarding the arithmetic mean and geometric mean is true? a) Arithmetic mean is always a better measure of average performance. b) Geometric mean is never a better measure of average performance. c) Arithmetic mean is always a better measure of performance over single periods. d) Geometric mean is the best estimate of the expected return for the next period.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT