Suppose the quarterly arithmetic average return for a security is 5% per quarter and the securitygives a return of 10% each over the next two quarters. The arithmetic average return over the six quarters is

Question

Quizplus · Accepted Answer

The arithmetic average return over six quarters is calculated by summing up the returns for each quarter and dividing by the number of quarters. Given that the return for the first four quarters is 5% each and 10% for the next two quarters, the total return is (5% * 4) + (10% * 2) = 40%. Dividing by 6 quarters gives an average return of 6.67%.

Suppose the Quarterly Arithmetic Average Return for a Security Is