I am confused about how to go about this problem. Please help. A researcher want

Question

I am confused about how to go about this problem. Please help.

A researcher wants to analyze the average yearly increase in a stock over a 20-year period. To do so, she plans to randomly choose 100 stocks from the listing of current stocks, discarding any that were not in existence 20 years ago. She will then compare the current price of each stock with its price 20 years ago to determine its percentage increase. Do you think this is a valid method to study the average increase in the price of a stock?

Explanation / Answer

Yes ,it is a valid method to study the avg increase in the price of stock.cumulative average growth rate is a term used to describe a percentage of increase of a stock over a set period of time. To calculate CAGR, we will need a few essential values- the starting value,(sv) ending or finishing value(ev), and the period of time (t)over which you wish to measure growth using the equation-

CAGR=((EV/SV)^ 1/T)) -1

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