Tabcorp share prices gave a realised return of 20%, 10%, 10%,and 15% over four successive quarters. What is the annual realised return for Tabcorp for the year?

Question

Quizplus · Accepted Answer

To calculate the annual realised return, we need to use the geometric mean.

Geometric mean = [(1+0.20)(1+0.10)(1+0.10)(1+0.15)]^(1/4) - 1 
Geometric mean = 1.6698 - 1 
Geometric mean = 0.6698 or 66.98%

Therefore, the annual realised return for Tabcorp for the year is 66.98%. The best choice is D.

Tabcorp Share Prices Gave a Realised Return of 20%, 10