A stock had returns of 5%, 16%, - 10%, and 18% over the past four years. What is the geometric average return for this time period?

Question

Quizplus · Accepted Answer

The geometric average return is calculated by multiplying the returns (expressed as decimal numbers), taking the nth root (where n is the number of returns), and subtracting 1. Here, it's ((1.05 * 1.16 * 0.90 * 1.18)^(1/4)) - 1 = 0.066 or 6.6%.

A Stock Had Returns of 5%, 16%, - 10%, and 18