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(Calculating the geometric and arithmetic average rate of return). The common stack of the Brangus Catile Compary had the following and-of-yoar stack prices over the tast five years and pais no cash dividends: a. Celculate the annual rate of retum for each year from the above information b. What is the arthmetic average rate of return earned by kivesting in Brangus Camle Company's stock over this poriod? c. What is the geometric average rate of return eamed by hvesting in Brangus. Catto Company's stock over this period? d. Which type of average rale of return best describes the average annual rise of cotum earned over the period (the arithmetic or geometric)? Win?? d. Which type of average rate of retum best describes the average annual rate of return eamed over the period (the arithmetic or gecmetric)? Why? (Select ithe best choice below) A. Arithmetic average retum best describes the average annual rate of rotum over a period because if takes compounding into acceunt se if annuers ine question concerning the expected rate of rotum over a multi-year period expected rate of retum over a multyear perisd. Arithmetic averago retum best describes the avotage annual rate of retam over a period because it is a simple average; so if answers the questicn cooceming the expected rate of retum over a multi-year peribd D. Geometric average return best describes the average annual nate of retum over a poriod because it takes compounding into account sa it answes he question concerning the expected rate of return cver a mult-rear perisd. a. The annual rate of rebum at the end of year 2 is \%. (Round to two decimal places) The annual rate of return at the end of year 3 is 16. (Round to two decimal places) The annual rate of return at the end of year 4 is \%. (Round to two decimal places.) The annual rate of retum at the end of year 5 is 36. (Round to two decimal places) b. The arithmetic average rate of retum earned by investing in Brangus Catlle Compary's stock over this period is 6. Round to two decimal piacte ) c. The geometric average rate of retum earned by inwesting in Brangus Cattle Company's stock ovar this period is i6. (Round to tyo decimal places)

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