The arithmetic average return on your portfolio for the past five years was 8.4 percent.Assume you earned -6 percent,25 percent,10 percent,and 6 percent for four of those five years.What rate of return did you earn in the fifth year?
A)5.0%
B)6.0%
C)7.5%
D)7.0%
E)10.0%

Question

Quizplus · Accepted Answer

Arithmetic average = .084 = (-.06 + .25 + .10 + .06 + R)/5R = .070,or 7.0%

The Arithmetic Average Return on Your Portfolio for the Past