Question

A trader triples his money in year one. However, he runs into trouble in year two...

A trader triples his money in year one. However, he runs into trouble in year two and loses 73%

Approximately what is his annual geometric mean return over this period?

-10%         

63.5

113.5

-17%

-20%
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Answer #2

Answer

Option a) -10%

Reason:

Formula for calculating Annual Geometric Mean Return =

Thus, putting the values in the above formula:

=   

=  

=  

=  

=  

Thus, Annual Geometric Mean Return is equal to -10%

answered by: anonymous
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