chapter 5 homework

5.22: Over 2 years you would have either owned 16.6% or 16.4% because (1+6%)(1+10%)-1=16.6%or (1+3%)(1+13%)=16.4% .Over 5 years you would get  115.5% or 1078 for stock and and 113.6% or $1068 for stock B

5.24: The compounded geometric rate of return is 12.9%. The average arithmetic rate of return is 13.4%. The arithmetic average is always the preferred number because it is always the higher number

5.26: r5=10%(1+r0,5)(1+r5)^5=1.6105making the 5 year total return 61.05

5.28 a.) 85.03 b.)6.35%  1.0635^10=1.8503