A portfolio of nondividend-paying stocks earned a geometric mean return of 5% be

Question

A portfolio of nondividend-paying stocks earned a geometric mean return of 5%
between January 1, 2005, and December 31, 2011. The arithmetic mean return for
the same period was 6%. If the market value of the portfolio at the beginning of
2005 was $100,000, what was the market value of the portfolio at the end of
2011?
  
  
  
  
  
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A portfolio of nondividend-paying stocks earned a geometric mean return of 5%
between January 1, 2005, and December 31, 2011. The arithmetic mean return for
the same period was 6%. If the market value of the portfolio at the beginning of
2005 was $100,000, what was the market value of the portfolio at the end of
2011?
  
  
  
  
  
  

Explanation / Answer

market value at the end of 2011=100000/5.582=17914.725

PVAF(6%,7years)=5.582

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