You bought one CVS stock $65 at the end of 2003 and sold it at the end of 2014 f

Question

You bought one CVS stock $65 at the end of 2003 and sold it at the end of 2014 for $90. Assume the firm did not pay dividend. What was your compound annual (geometric) rate of return? What was the compound annual (geometric) rate return if you bought 10 shares instead? You bought one CVS stock $65 at the end of 2003 and sold it at the end of 2014 for $90. Assume the firm did not pay dividend. What was your compound annual (geometric) rate of return? What was the compound annual (geometric) rate return if you bought 10 shares instead? You bought one CVS stock $65 at the end of 2003 and sold it at the end of 2014 for $90. Assume the firm did not pay dividend. What was your compound annual (geometric) rate of return? What was the compound annual (geometric) rate return if you bought 10 shares instead?

Explanation / Answer

Compounded annual (geometric) rate of return:

= (1+$25÷$65)^(1÷11)-1

= 3%

Return does not change with change in quantity of shares purchased. It is constant.

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