Question 1: A stock has the following returns over three consecutive years: -85%

Question

Question 1:

A stock has the following returns over three consecutive years:  -85%, 135%, and -4%. What is the arithmetic average?

Question 2

A stock has the following returns over three consecutive years:  140%, 77%, and 130%. What is the geometric average?

Question 3

A stock has the following returns over three consecutive years:  52%, -40%, and -12%. What is the appropriate average?

Question 4

A stock has the following returns over three consecutive years:  141%, 4%, and 102%. What is the standard deviation of these returns?

Explanation / Answer

Dear student, only one question is allowed at a time. I am answering the first question

Average return

= Sum of observations / Number of observations

= (-85% + 135% - 4 %) / 3

= 46% / 3

= 15.33%

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