Marcus Berger invested $9842.33 in Hawkeye Hats, Inc. four years ago. He sold the stock today for $11,396.22. What is his geometric average return?
A) 2.98%
B) 3.73%
C) 3.95%
D) There is insufficient information to derive an answer.

Question

Quizplus · Accepted Answer

To find the geometric average return, we use the formula:

Geometric average return = (Ending value / Beginning value) ^ (1 / number of years) − 1

Plugging in the values, we get:

Geometric average return = ($11,396.22 / $9842.33)^(1/4) - 1
                        = 1.0373 - 1
                        = 0.0373
                        = 3.73%

Therefore, the answer is (B) 3.73%.

Marcus Berger Invested $9842