What is the geometric average return of Roddy's Richard's investment?
A) 3.38%
B) 4.63%
C) 6.96%
D) 8.78%

Question

Quizplus · Accepted Answer

The geometric average return is calculated by taking the nth root of the product of (1 + r1) * (1 + r2) * ... * (1 + rn), where r1, r2, ..., rn are the returns in each period. In this case, the returns are 4%, 6%, and 8%. So, the geometric average return is the cube root of (1 + 0.04) * (1 + 0.06) * (1 + 0.08) = 1.0338, which is approximately 3.38%.

What Is the Geometric Average Return of Roddy's Richard's Investment