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# Q6 - Retail Index are 2005 2006 2007 2008 2009 26.38-0.94...

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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 S&P 500 \$ 100.00 \$ 110.79 \$ 129.00 \$ 100.65 \$ 93.70 \$ 103.22 S&P Apparel Retail Index \$ 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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Q6 - Retail Index are 2005 2006 2007 2008 2009 26.38-0.94...

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