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80) An asset had annual returns of 17, -35, -18, 24, and 6 percent, respectively, over the past five
years. What is the arithmetic average return?
A) -1.2 percent
B) 0.8 percent
C) 1.2 percent
D) 1.6 percent
E) 2.3 percent
81) Celsius stock had year end prices of $42, $37, $44, and $46 over the past four years,
respectively. What is the arithmetic average rate of return?
A) 3.17 percent
B) 3.85 percent
C) 4.28 percent
D) 10.63 percent
E) 11.79 percent
82) Blackstone Mines stock returned 10.5, 17.2, -9.0, and 14.5 percent over the past four years,
respectively. What is the geometric average return?
A) 5.84 percent
B) 6.36 percent
C) 7.78 percent
D) 9.94 percent
E) 10.33 percent
83) You invested $5,000 eight years ago. The arithmetic average return on your investment is
10.6 percent and the geometric average return is 10.23 percent. What is the value of your
portfolio today?
A) $9,092
B) $10,623
C) $10,899
D) $10,947
E) $11,195
84) Joanne invested $15,000 six years ago. Her arithmetic average return on this investment is
8.72 percent, and her geometric average return is 8.50 percent. What is Joanne's portfolio worth
today?
A) $23,989
B) $24,472
C) $26,409
D) $26,514
E) $26,766
85) A stock produced annual returns of 8.3, -21, 12, 42, and 9 percent over the past five years,
respectively. What is the geometric average return?
A) 5.78 percent
B) 6.03 percent
C) 6.34 percent
D) 7.21 percent
E) 8.20 percent
86) Over the past five years, an investment produced annual returns of 16.5, 21, -18, 4, and 17
percent, respectively. What is the geometric average return?
A) 6.42 percent
B) 7.06 percent
C) 8.00 percent
D) 15.60 percent
E) 16.00 percent
87) A portfolio had an original value of $7,400 seven years ago. The current value of the
portfolio is $11,898. What is the average geometric return on this portfolio?
A) 7.02 percent
B) 7.47 percent
C) 7.59 percent
D) 7.67 percent
E) 7.88 percent
88) An initial investment of $41,800 fifty years ago is worth $1,533,913 today. What is the
geometric average return on this investment?
A) 7.47 percent
B) 8.02 percent
C) 9.23 percent
D) 10.47 percent
E) 11.08 percent
89) A stock had year end prices of $24, $27, $32, and $26 over the past four years, respectively.
What is the geometric average return?
A) 2.02 percent
B) 2.18 percent
C) 2.55 percent
D) 2.70 percent
E) 2.81 percent
90) The geometric return on a stock over the past 10 years was 7.9 percent. The arithmetic return
over the same period was 8.8 percent. What is the best estimate of the average return on this
stock over the next 5 years?
A) 8.40 percent
B) 9.05 percent
C) 9.08 percent
D) 9.13 percent
E) 9.47 percent
91) The geometric return on an asset over the past 12 years has been 14.50 percent. The
arithmetic return over the same period was 14.96 percent. What is the best estimate of the
average return on this asset over the next 5 years?
A) 14.47 percent
B) 14.67 percent
C) 14.79 percent
D) 14.88 percent
E) 14.86 percent
92) A stock has an average arithmetic return of 10.55 percent and an average geometric return of
10.41 percent based on the annual returns for the last 15 years. What is projected average annual
return on this stock for the next 10 years?
A) 10.17 percent
B) 10.21 percent
C) 10.38 percent
D) 10.46 percent
E) 10.79 percent
93) Leeanne owns a stock that has an average geometric return of 12.30 percent and an average
arithmetic return of 12.55 percent over the past six years. What average annual rate of return
should Leeanne expect to earn over the next four years?
A) 12.38 percent
B) 12.40 percent
C) 12.44 percent
D) 12.47 percent
E) 12.51 percent
94) Tom decides to begin investing some portion of his annual bonus, beginning this year with
$6,000. In the first year he earns an 8 percent return and adds $3,000 to his investment. In the
second his portfolio loses 4 percent but, sticking to his plan, he adds $1,000 to his portfolio. In
this year his portfolio returns 2 percent. What is Tom's dollar-weighted average return on his
investments?
A) 0.34 percent
B) 1.20 percent
C) 1.54 percent
D) 2.23 percent
E) 2.58 percent
95) Bill has been adding funds to his investment account each year for the past 3 years. He
started with an initial investment of $1,000. After earning a 10 percent return the first year, he
added $3,000 to his portfolio. In this year his investments lost 5 percent. Undeterred, Bill added
$2,000 the next year and earned a 2 percent return. Last year, discouraged by the recent results,
he only added $500 to his portfolio, but in this final year his investments earned 8 percent. What
was Bill's dollar-weighted average return for his investments?
A) 1.5 percent
B) 2.0 percent
C) 2.5 percent
D) 3.0 percent
E) 3.5 percent
48
96) John began his investing program with a $5,500 initial investment. The table below recaps
his returns each year as well as the amounts he added to his investment account. What is his
dollar-weighted average return?
Time
Investment
Return
0
$
5,500
8.5
%
1
$
2,000
-
5.0
%
2
$
2,600
4.5
%
3
$
3,000
9.0
%
4
$
900
-
2.5
%
A) 1.5 percent
B) 1.8 percent
C) 2.0 percent
D) 2.2 percent
E) 2.6 percent
50
97) Jim began his investing program with a $4,000 initial investment. The table below recaps his
returns each year as well as the amounts he added to his investment account. What is his dollar-
weighted average return?
TIME
INVESTMENT
RETURN
0
$
4,000
10
%
1
$
2,800
-5
%
2
$
900
2
%
3
$
1,600
8
%
4
$
2,100
-3
%
5
$
2,400
6
%
A) 1.6 percent
B) 2.2 percent
C) 2.6 percent
D) 3.2 percent
E) 3.6 percent
98) One year ago, you purchased 300 shares of stock at a cost of $6,000. The stock paid an
annual dividend of $1.10 per share. Today, you sold those shares for $22.50 each. What is the
capital gains yield on this investment?
A) 9.96 percent
B) 10.52 percent
C) 12.50 percent
D) 13.81 percent
E) 14.75 percent
99) Eileen just sold a stock and realized a 6.25 percent return for a 7-month holding period. What
was her annualized rate of return?
A) 9.98 percent
B) 10.95 percent
C) 12.78 percent
D) 15.29 percent
E) 17.20 percent
100) Downtown Industries common stock had returns of 5.2, 10.3, 9.3, and 9.5 percent,
respectively, over the past four years. What is the standard deviation of these returns?
A) 2.29 percent
B) 2.38 percent
C) 2.41 percent
D) 2.59 percent
E) 2.82 percent
101) You own a stock that has produced an arithmetic average return of 5.6 percent over the past
five years. The annual returns for the first four years were 15, 10, -18, and 8 percent,
respectively. What was the rate of return on the stock in year five?
A) -5.00 percent
B) 2.75 percent
C) 6.25 percent
D) 13.00 percent
E) 32.00 percent
102) A stock produced annual returns of 8.5, -18, 15, 17, and 12 percent over the past five years,
respectively. What is the geometric average return?
A) 5.78 percent
B) 6.04 percent
C) 6.34 percent
D) 7.21 percent
E) 8.20 percent
103) Louis owns a stock that has an average geometric return of 10.50 percent and an average
arithmetic return of 11.00 percent over the past six years. What average annual rate of return
should Louis expect to earn over the next four years?
A) 10.38 percent
B) 10.40 percent
C) 10.64 percent
D) 10.70 percent
E) 10.81 percent
55
104) John began his investing program with a $5,500 initial investment. The table below recaps
his returns each year as well as the amounts he added to his investment account. What is his
dollar-weighted average return?
Time
Investment
Return
0
$
6,500
7.5
%
1
$
2,500
-
4.0
%
2
$
3,100
5.0
%
3
$
3,000
8.0
%
4
$
800
-
1.5
%
A) 1.5 percent
B) 1.8 percent
C) 2.0 percent
D) 2.2 percent
E) 2.8 percent
