A five-year investment earned the following annual rates of return: 4.2%, 6.8%, 9.8% 12.1% and -11.6%. Determine the average annual rate of return.
A) 2.45%
B) 2.63%
C) 3.05%
D) 3.68%
E) 3.90%

Question

Quizplus · Accepted Answer

To find the average annual rate of return, add all the annual rates of return and then divide by the number of years. (4.2 + 6.8 + 9.8 + 12.1 - 11.6) / 5 = 21.3 / 5 = 4.26%. However, none of the options match this calculation directly, suggesting a possible misunderstanding in the question's intent or a mistake in the calculation or options provided. Given the options, the closest or a recalculated approach based on the options would lead to reevaluation. Correcting for potential oversight in calculation and considering the options provided, the average might be intended to be calculated differently or there's a mistake in the initial calculation or interpretation of the options.

A Five-Year Investment Earned the Following Annual Rates of Return