What are the arithmetic and geometric average returns for a stock with annual returns of 14.9 percent,14.6 percent,−2.8 percent,and 9.7 percent?
A)9.100%; 8.673%
B)8.882%; 8.854%
C)9.100%; 8.771%
D)8.897%; 8.854%
E)9.100%; 8.854%

Question

Quizplus · Accepted Answer

Arithmetic average = (0.149 + 0.146 − 0.028 + 0.097)/ 4 = 0.091,or 9.1% Geometric return = (1.149 × 1.146 × 0.972 × 1.097)^.25 − 1 = 0.08854,or 8.854%

What Are the Arithmetic and Geometric Average Returns for a Stock