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F301 Spring 2011
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F301 Problem Set 5 Solutions
Spring 2011
▪
Each question is worth 3 points. 33 points possible.
Shown below are the yearend closing stock prices for shares of Walt Disney Co. for the last six years.
The rate of return per year is the percent change from one year to the next. Use this information to answer
Yearend
2005
2006
2007
2008
2009
2010
Yearend
2005
2006
2007
2008
2009
2010
$23.91
$33.52
$28.75
$20.22
$29.23
$38.88
23.91
33.52
28.75
20.22
29.23
38.87
40.19%
14.23%
29.67%
44.56%
32.98%
1.
Compute the arithmetic average return from yearend 2005 to yearend 2010. Show your answer as a
Arith
14.77%
140.19%
85.77%
70.33%
144.56%
132.98%
percent with two decimal places.
2.
Compute the geometric average return from yearend 2005 to yearend 2010. Show your answer as a
Geom
10.21%
percent with two decimal places.
3.
Using Excel or your calculator, find the standard deviation of the returns. Show your answer as a
Stdev
34.21%
4.
Show the future value equation, and use this equation to compute the future value of the first stock
price after five years. Use the geometric average as the annual rate of return.
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This note was uploaded on 03/15/2012 for the course BUSF 301 taught by Professor T during the Spring '12 term at IUPUI.
 Spring '12
 T

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