A stock has had returns of 19.0 percent, 29.0 percent, 24.0 percent, 10.1 percen

Question

A stock has had returns of 19.0 percent, 29.0 percent, 24.0 percent, 10.1 percent, 34.8 percent, and 27.0 percent over the last six years.

Required:

What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

  Arithmetic average return

14.28 %

  Geometric average return

%

A stock has had returns of 19.0 percent, 29.0 percent, 24.0 percent, 10.1 percent, 34.8 percent, and 27.0 percent over the last six years.

Explanation / Answer

Arithmetic Mean Year Return 1 -19.00 2 29.00 3 24.00 4 -10.10 5 34.80 6 27.00 Total 85.70 Mean (total return/ no: of years) 14.28 Geometric Mean (-19*29*24*-10.1*34.8*27)^1/6 (125495231.04)^1/6 10.29

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