You’ve observed the following returns on Hacker Corporation’s stock over the past five years: -25%, 36%, 9%, 11%, and 17%. Answer the following questions.
1. What is the geometric average return on the stock over this five-year period?
a. 7.62%
b. 9.60%
c. 8.49%
d. 6.35%
2. According to the Blume's formula, what is the 2-year average return forecast?
a. 8.57%
b. 7.62%
c. 9.60%
d. 9.11%