The
following table gives the value of the Dow Jones Industrial Average (DJIA),
NASDAQ, and the...

Question

The
following table gives the value of the Dow Jones Industrial Average (DJIA),
NASDAQ, and the S&P 500 on the first day of trading for the years 2010
through 2013.



a For each
stock index, compute the rate of return from 2010 to 2011, from 2011 to 2012,
and from 2012 to 2013. 

b Calculate
the geometric mean rate of return for each stock index for the period from 2010
to 2013. 

c Suppose
that an investment of $100,000 is made in 2010 and that the portfolio performs
with returns equal to those of the DJIA. What is the investment worth in 2013? 

d Repeat
part c for the NASDAQ and the S&P 500.

Ajay · Accepted Answer

A
DJIA:page
2010 to 2011: ($10,655 - $10,428) / $10,428 = 0.0255 or 2.55%
2011 to 2012: ($12,463 - $11,555) / $11,555 = 0.0724 or 7.24%
2012 to 2013: ($16,576 - $13,104) / $13,104 = 0.2654 or 26.54%
NASDAQ:
2010 to 2011: ($2,620 - $2,268) / $2,268 = 0.1512 or 15.12%
2011 to 2012: ($2,471 - $2,291) / $2,291 = 0.0181 or 1.81%
2012 to 2013: ($3,319 - $2,391) / $2,391 = 0.3830 or 38.30%
S&P 500:
2010 to 2011: ($1,

The following table gives the value of the Dow Jones Industrial Average (DJIA), NASDAQ, and the S&P 500 on the first day of trading for the years 2010 through 2013. a For each stock index, compute the...

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