Caswell Enterprises had the following end-of-year stock prices over the last five years and paid no dividends.

[Tiffwag89]

Please for help

Time Caswell
1 $10
2 $15
3 $12
4 $9
5 $10

a. Calculate the average rate of return for each year from the above information.
b. What is the arithmetic average rate of return earned by investing in Caswell's stock over this period?
c. What is the geometric average rate of return earned by investing in Caswell's stock over this period?
d. Considering the beginning and ending stock prices for the five-year period are the same, which type of average rate of return best describes the annual rate of return earned over the period (arithmetic or geometric)?

 

[JeffM]

Where are you stuck?

Let's start with your four annual rates of return. What did you compute for those?