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Over the last 3 years, your investment has yielded returns of 7.3%, -2.8%, and 25.0%. What...

Over the last 3 years, your investment has yielded returns of 7.3%, -2.8%, and 25.0%. What is the geometric average return over that time period?

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Answer #1

Geometric average return = ​[(1+R1​)×(1+R2​)×(1+R3​)…×(1+Rn​)]^(1/n)−1

where:

R=Return

n=Count of the numbers in the series​

Geometric average retrun = [(1+0.073)*(1-0.028)*(1+0.25)]^(1/3) - 1
                                                      = 1.3037^(1/3) - 1
                                                     = 0.924 or 9.24%
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