The future annual returns over five years. Introduction: Arithmetic average return refers to the returns that an investment earns in an average year over different periods. Geometric average return refers to the return per year after compounding the average returns for multiple years. Person B’s formula helps in deriving a return forecast by combining both the arithmetic and geometric averages. Person B’s formula states that the investors should use a combination of arithmetic and geometric average return for forecasting a few decades. This would be helpful for retirement planning.

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Answer 1

Question

Chapter 12, Problem 21QP

Summary Introduction

To determine: The future annual returns over five years.

Introduction:

Arithmetic average return refers to the returns that an investment earns in an average year over different periods. Geometric average return refers to the return per year after compounding the average returns for multiple years.

Person B’s formula helps in deriving a return forecast by combining both the arithmetic and geometric averages. Person B’s formula states that the investors should use a combination of arithmetic and geometric average return for forecasting a few decades. This would be helpful for retirement planning.

Summary Introduction

To determine: The future annual returns over twenty years.

Summary Introduction

To determine: The future annual returns over thirty years.

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Answer 2

Question

Chapter 12, Problem 21QP

Summary Introduction

To determine: The future annual returns over five years.

Introduction:

Arithmetic average return refers to the returns that an investment earns in an average year over different periods. Geometric average return refers to the return per year after compounding the average returns for multiple years.

Person B’s formula helps in deriving a return forecast by combining both the arithmetic and geometric averages. Person B’s formula states that the investors should use a combination of arithmetic and geometric average return for forecasting a few decades. This would be helpful for retirement planning.

Summary Introduction

To determine: The future annual returns over twenty years.

Summary Introduction

To determine: The future annual returns over thirty years.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 12, Problem 21QP

Summary Introduction

To determine: The future annual returns over five years.

Introduction:

Arithmetic average return refers to the returns that an investment earns in an average year over different periods. Geometric average return refers to the return per year after compounding the average returns for multiple years.

Person B’s formula helps in deriving a return forecast by combining both the arithmetic and geometric averages. Person B’s formula states that the investors should use a combination of arithmetic and geometric average return for forecasting a few decades. This would be helpful for retirement planning.

Summary Introduction

To determine: The future annual returns over twenty years.

Summary Introduction

To determine: The future annual returns over thirty years.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 12, Problem 21QP

Summary Introduction

To determine: The future annual returns over five years.

Introduction:

Arithmetic average return refers to the returns that an investment earns in an average year over different periods. Geometric average return refers to the return per year after compounding the average returns for multiple years.

Person B’s formula helps in deriving a return forecast by combining both the arithmetic and geometric averages. Person B’s formula states that the investors should use a combination of arithmetic and geometric average return for forecasting a few decades. This would be helpful for retirement planning.

Summary Introduction

To determine: The future annual returns over twenty years.

Summary Introduction

To determine: The future annual returns over thirty years.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 12, Problem 21QP

Summary Introduction

To determine: The future annual returns over five years.

Introduction:

Arithmetic average return refers to the returns that an investment earns in an average year over different periods. Geometric average return refers to the return per year after compounding the average returns for multiple years.

Person B’s formula helps in deriving a return forecast by combining both the arithmetic and geometric averages. Person B’s formula states that the investors should use a combination of arithmetic and geometric average return for forecasting a few decades. This would be helpful for retirement planning.

Summary Introduction

To determine: The future annual returns over twenty years.

Summary Introduction

To determine: The future annual returns over thirty years.

Answer 6

Chapter 12, Problem 21QP

Summary Introduction

To determine: The future annual returns over five years.

Introduction:

Arithmetic average return refers to the returns that an investment earns in an average year over different periods. Geometric average return refers to the return per year after compounding the average returns for multiple years.

Person B’s formula helps in deriving a return forecast by combining both the arithmetic and geometric averages. Person B’s formula states that the investors should use a combination of arithmetic and geometric average return for forecasting a few decades. This would be helpful for retirement planning.

Answer 7

Chapter 12, Problem 21QP

Summary Introduction

To determine: The future annual returns over five years.

Introduction:

Arithmetic average return refers to the returns that an investment earns in an average year over different periods. Geometric average return refers to the return per year after compounding the average returns for multiple years.

Person B’s formula helps in deriving a return forecast by combining both the arithmetic and geometric averages. Person B’s formula states that the investors should use a combination of arithmetic and geometric average return for forecasting a few decades. This would be helpful for retirement planning.

Answer 8

Summary Introduction

To determine: The future annual returns over twenty years.

Answer 9

Summary Introduction

To determine: The future annual returns over twenty years.

Answer 10

Summary Introduction

To determine: The future annual returns over thirty years.

Answer 11

Summary Introduction

To determine: The future annual returns over thirty years.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 12.1 - Prob. 12.1ACQ Ch. 12.1 - Why are unrealized capital gains or losses...Ch. 12.1 - What is the difference between a dollar return and...Ch. 12.2 - Prob. 12.2ACQ Ch. 12.2 - Why doesnt everyone just buy small stocks as...Ch. 12.2 - What was the smallest return observed over the 88...Ch. 12.2 - About how many times did large-company stocks...Ch. 12.2 - What was the longest winning streak (years without...Ch. 12.2 - How often did the T-bill portfolio have a negative...Ch. 12.3 - Prob. 12.3ACQ

Concept explainers

To determine: The future annual returns over twenty years.

To determine: The future annual returns over thirty years.

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Chapter 12 Solutions