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

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Quizplus · Accepted Answer

The arithmetic average return over the six quarters is calculated by summing the returns for each quarter and dividing by the number of quarters. The stock gives a return of 5% for four quarters and 10% for two quarters. Thus, the total return is (5% * 4) + (10% * 2) = 20% + 20% = 40%. Dividing by 6 quarters gives an average return of 6.67%.

Suppose the Quarterly Arithmetic Average Return for a Stock Is