The geometric average annual return for a large capitalisation share portfolio is 12% for ten yearsand 5% per year for the next five years. The geometric average annual return for the entire 15-year period is

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Quizplus · Accepted Answer

The geometric average annual return is calculated by taking the nth root of the product of (1 + each annual return), where n is the total number of years. For this problem, the formula is: [(1.12^10) * (1.05^5)]^(1/15) - 1. Calculating this gives approximately 9.62%.

The Geometric Average Annual Return for a Large Capitalisation Share