The following data represent monthly returns (in percent): -7.24 1.64 3.48 -2.49 9.30
The geometric mean return is the closest to ________.
A) -0.43%
B) 0.78%
C) 0.94%
D) 4.79%

Question

Quizplus · Accepted Answer

The geometric mean return is calculated by multiplying all the returns (converted to decimal form), taking the nth root (where n is the number of returns), and subtracting 1. The calculation is: [(1-0.0724)*(1+0.0164)*(1+0.0348)*(1-0.0249)*(1+0.0930)]^(1/5) - 1 = 0.0078 or 0.78%.

The Following Data Represent Monthly Returns (In Percent): -7