Use the following information to answer the following question(s).
Susan Bright will get returns of 18%,-20.3%,-14%,17.6%,and 8.3% in the next five years on her investment in a CB Australia Limited share,which she purchases for $73,419.66 today.
-What is the geometric average return on her share if she sells it five years from today?
A)-2.33%
B).59%
C)3.67%
D)4.88%

Question

Quizplus · Accepted Answer

The geometric average return is calculated by multiplying all the returns (converted to decimal form), taking the fifth root (since there are five years), and subtracting 1. The calculation is: [(1+0.18)*(1-0.203)*(1-0.14)*(1+0.176)*(1+0.083)]^(1/5) - 1 = 0.0059 or 0.59%.

Use the Following Information to Answer the Following Question(s)