On January 1, 2001, Mr. Arman bought 100 shares of stock at Tk. 120 per share. On December 31, 2005, he sold the stock for Tk. 150 per share.

On January 1, 2001, Mr. Arman bought 100 shares of stock at Tk. 120 per share. On December 31, 2005, he sold the stock for Tk. 150 per share.
What is the annual rate of return?

To find the annual rate of return, we calculate the Compound Annual Growth Rate (CAGR), which accounts for compounding over the 5-year holding period (from January 1, 2001, to December 31, 2005).

Given Data:

• Purchase Price per Share (): Tk. 120
• Selling Price per Share (): Tk. 150
• Number of Shares: 100 (Note: The number of shares cancels out, so you can calculate per share or total value)
• Holding Period (): 5 years (2001 to 2005)

Calculation (Compound Annual Rate of Return / CAGR):

The formula for CAGR is:

Substitute the values:

Alternative: Simple (Average) Annual Return

If the question asks for simple non-compounded annual return:

1. Total Return:

2. Simple Annual Return:

Final Answer:

• Compound Annual Rate of Return (CAGR): 4.56% (Standard financial answer)
• Simple Annual Return: 5.00%

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