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:
A)9%
B)6.67%
C)7.5%
D)10%
E)12%

Question

Quizplus · Accepted Answer

The arithmetic average return over six quarters is calculated by summing all the quarterly returns and then dividing by the number of quarters. For the first four quarters, the total return is 4 quarters * 5% = 20%. For the next two quarters, the total return is 2 quarters * 10% = 20%. So, the total return over six quarters is 40%, and the average return per quarter is 40% / 6 quarters = 6.67%.

Suppose the Quarterly Arithmetic Average Return for a Stock Is