a. Over the past twelve months, Lululemon had monthly returns of -5%, 0%, 0%, -5%, 0%, 0%, 10%, 15%, 10%, 0%, 0%, and 5%. What was the total return over this period?
b. Suppose Shake Shack returns 10% this year and -10% next year. What is the total return over this 2-year period? Explain why this is not equal to 0%. What would the return for next year have to equal (assuming this year’s return is still 10%) for the total return over two years to be 0%?
c. Suppose a stock has returns of -2% every month. What is the total return over the course of 1 year? What is the total return over a decade?
d. Suppose a stock has a total return of 5% over the course of 5 trading days (Mon-Fri). The stock had the same return (r) for each of these days. Solve for r. Explain why r is not equal to 1%.