Holding period and annual (investment) returns. Baker Baseball Cards, Inc. originally purchased the rookie card of Hammerin' Hank Aaron for $ 24.00. After holding the card for 5 years, Baker Baseball Cards auctioned the card for $ 168.00. What are the holding period return, the simple annualized return and the compound annualized return on this investment? What is the holding period return of the baseball card? nothing% (Round to two decimal places.) What is the simple annualized return on the baseball card? nothing% (Round to two decimal places.) What is the compound annualized return on the baseball card? nothing% (Round to two decimal places.)

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letmeanswer letmeanswer · Answer 1 · 2020-04-05T13:23:35+02:00

Solution and Explanation:

We see that holding period return = (selling price/purchase price-1) = [tex]168 / 24-1=600 \%[/tex]

Case 1: the simple return is calculated using the compounding

The Simple annual return is = (Future Value/Present Value ) ^ (1/t) -1

[tex]=(168 / 24)^{\wedge}(1 / 5)-1=47.5773 \%[/tex]

= 47.58 % (rounded to 2 decimal places)

Case 2: the simple return is calculated using the average

The Simple annual return = Holding period return divide by t = 600% divide by 5 = 120%