USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The annual rates of return of Stock Z for the last four years are 0.10, 0.15, -0.05, and 0.20, respectively.
-Refer to Exhibit 1.8. Compute the arithmetic mean annual rate of return for Stock Z.
A) 0.03
B) 0.04
C) 0.06
D) 0.10
E) 0.40

Question

Quizplus · Accepted Answer

The arithmetic mean annual rate of return is calculated by summing the annual rates of return and dividing by the number of years. Here, (0.10 + 0.15 + (-0.05) + 0.20) / 4 = 0.10.