Returns of a Single Asset. Suppose you have invested in 2 assets whose annual returns are shown in the following table. If you invest $1000 in each asset: What will be the value of each asset at the end of year 5? What is the single annual rate which would yield the same value at the end of year 5? (meaning, what is the geometric average annual rate of return?)   Year                                                                               Asset A Asset B 1 -6.01% -9.98% 2 -10.27% 12.30% 3 13.75% 18.15% 4 24.31% -1.69% 5 20.88% 5.00%

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Returns of a Single Asset. Suppose you have invested in 2 assets whose annual returns are shown in the following table. If you invest $1000 in each asset:

  1. What will be the value of each asset at the end of year 5?
  2. What is the single annual rate which would yield the same value at the end of year 5? (meaning, what is the geometric average annual rate of return?)

 

Year

                                                                             

Asset A

Asset B

1

-6.01%

-9.98%

2

-10.27%

12.30%

3

13.75%

18.15%

4

24.31%

-1.69%

5

20.88%

5.00%

                                                                                                                                                                                                                                  

please use excel

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