Homework: Chapter 11 Score: 0 of 1 pt P 11-11 (book/static) Ten annual returns a
ID: 2787483 • Letter: H
Question
Homework: Chapter 11 Score: 0 of 1 pt P 11-11 (book/static) Ten annual returns are listed in the following table: Homework 19996 16.8% 18 2% 49 1% 435% 13% -16.2% 45 5% 44 5% -34% - a. What is the arithmetic average return over the 10-year period? b. What is the geometric average return over the 10-year period? c. If you invested $100 at the beginning, how much would you have at the end? a. What is the arithmetic average return over the 10-year period? The arithmetic average return over the 10-year period is 0.0812. (Round to four decimal places) b. What is the geometric average return over the 10-year period? The geometric average return over the 10-year period is (Round to four decimal places.)Explanation / Answer
Arithmetic average=(-19.9%+16.8%+18.2%-49.1%+43.5%+1.3%-16.2%+45.5%+44.5%-3.4%)/10=8.12%
Geometric Average=((1-19.9%)*(1+16.8%)*(1+18.2%)*(1-49.1%)*(1+43.5%)*(1+1.3%)*(1-16.2%)*(1+45.5%)*(1+44.5%)*(1-3.4%))^(1/10)-1=3.36711%
If you invested 100 in the beginning it will become 100*(1+3.36711%)^10=$139.25915
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