Below is the stock price and dividend history for No-Cameras-Allowed Inc. (NCA), company organizing Las Vegas retreats for investment banks. Year Stock Price (end-of-year) Dividend (paid during the year) 2019 90 2020 180 18 2021 120 6. a. Compute the annual return in 2020 and 2021. b. Compute the arithmetic average return over the 2019–2021 period. c. Compute the geometric average return over the 2019–2021 period. d You bhuy 2. 000 obon

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
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O Below is the stock price and dividend history for No-Cameras-Allowed Inc. (NCA), a
company organizing Las Vegas retreats for investment banks.
Stock Price (end-of-year)
Dividend (paid during the year)
Year
2019
90
180
18
2020
2021
120
6.
a. Compute the annual return in 2020 and 2021.
b. Compute the arithmetic average return over the 2019–2021 period.
c. Compute the geometric average return over the 2019–2021 period.
d. You buy 2,000 shares of NCA at the end of 2019 and hold them through the
end of 2021. You reinvest any dividends received (i.e., you use the dividend
proceeds to buy more shares of NCA). Except for reinvestment of dividends,
you neither buy nor sell any shares before the end of 2021.
Which average, arithmetic or geometric, better captures your investment
performance over the 2019–2021 period? Please provide a brief explanation for
your answer.
B Focus
MacBook Pro
Transcribed Image Text:O Below is the stock price and dividend history for No-Cameras-Allowed Inc. (NCA), a company organizing Las Vegas retreats for investment banks. Stock Price (end-of-year) Dividend (paid during the year) Year 2019 90 180 18 2020 2021 120 6. a. Compute the annual return in 2020 and 2021. b. Compute the arithmetic average return over the 2019–2021 period. c. Compute the geometric average return over the 2019–2021 period. d. You buy 2,000 shares of NCA at the end of 2019 and hold them through the end of 2021. You reinvest any dividends received (i.e., you use the dividend proceeds to buy more shares of NCA). Except for reinvestment of dividends, you neither buy nor sell any shares before the end of 2021. Which average, arithmetic or geometric, better captures your investment performance over the 2019–2021 period? Please provide a brief explanation for your answer. B Focus MacBook Pro
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