The simple return is calculated using the formula:
Rtβ=Ptβ1βPtββPtβ1ββ
For time 4:
R4β=P3βP4ββP3ββ=97.5095.67β97.50β=97.50β1.83β=β0.01876923
Converting to percentage:
β0.01876923Γ100=β1.876923%ββ1.88%
The calculation shows:
- Price at time 3 (Pβ) = 97.50
- Price at time 4 (Pβ) = 95.67
- Difference: 95.67 - 97.50 = -1.83
- Simple return: -1.83 / 97.50 = -0.01876923 = -1.88%
Therefore, the simple return at time 4 is -1.88%.