Q6 - Retail Index are: 2005 2006 2007 2008 2009...

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FIN 301 Winter 2011-02-17 Quiz Six NAME _________________________________________________________________ Consider a $100 investment in the following three assets: 2005 2006 2007 2008 2009 2010 Destination Maternity Corporation $ 100.00 $ 481.20 $ 186.70 $ 138.80 $ 181.30 $ 329.20 $ 100.00 $ 110.79 $ 129.00 $ 100.65 $ 93.70 $ 103.22 $ 100.00 $ 126.38 $ 125.19 $ 109.42 $ 126.61 $ 149.85 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Destination Maternity Corporation, The S&P 500 Index And The S&P Apparel Retail Index The annual returns you would have earned if you had invested in the S&P Apparel
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Unformatted text preview: Retail Index are: 2005 2006 2007 2008 2009 26.38%-0.94% 12.60% 15.71% 18.36% _______________________________________________________________________ _ 1. What is the arithmetic average return? (26.38 + -0.94 + 12.60 + 15.71 + 18.36) / 5 = 14.42% 2. What is the geometric average return? (1.2638 * 0.9960 * 1.1260 * 1.1571 * 1.1836) ^ (1/5) = 14.06% 3. Perform a 2-second audit on the correctness of the geometric return you calculated. Does 1.1406^5 equal the product of the returns? 1.1406^5 = 1.930487 (1.2638 * 0.9960 * 1.1260 * 1.1571 * 1.1836) = 1.930594 Close enough....
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This note was uploaded on 01/29/2012 for the course FIN 301 taught by Professor Ouyang during the Winter '08 term at Drexel.

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Q6 - Retail Index are: 2005 2006 2007 2008 2009...

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