Over the last four years,a stock has had an arithmetic average return of 8.8 percent.Three of those four years produced returns of 16.3 percent,10.2 percent,and -14.1 percent,respectively.What is the geometric average return for this four-year period?

Question

Quizplus · Accepted Answer

Arithmetic average return = 0.088 = (0.163 + 0.102 - 0.141 + x)/4x = 22.8 percentGeometric average return = [1.163 × 1.102 × 0.859 × 1.228)^1/4 - 1 = 7.83 percent

Over the Last Four Years,a Stock Has Had an Arithmetic