Series Arithmetic Mean What was the arithmetic average annual return on large-co
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Question
Series
Arithmetic Mean
What was the arithmetic average annual return on large-company stocks in nominal terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
What was the arithmetic average annual return on large-company stocks in real terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Consider the following information on large-company stocks for a period of years.Explanation / Answer
1) The arithmetic average annual return on large-company stocks in nominal terms was 12.9%.
2) The arithmetic average annual return on large-company stocks in real terms was 12.9% - 3.4% = 9.50%.
Recall that nominal return = real return + inflation rate
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