Question

A stock has annual returns of 7.4 percent, 15.8 percent, -16.4 percent, 12.1 percent, and 22.2...

A stock has annual returns of 7.4 percent, 15.8 percent, -16.4 percent, 12.1 percent, and 22.2 percent for the past five years. What is the geometric average return for the period is _____ percent. Show your answer to the nearest .01%, do not use the % sign in your answer. If the answer is negative, use the - sign.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Geometric average return (Geometric mean) can be calculated with help of below formula -

where,

r1 = return of 1st year

r2= return of 2nd year

rN = return of nth year

n = no. of years

Returns are shown in table below-

Year Return (%) 1 + r
1 7.4 1.074
2 15.8 1.158
3 -16.4 0.836
4 12.1 1.121
5 22.2 1.222

Taking 5th under root of 1.424281839, we get-

= 1.07329520054058 - 1

= 0.073295201

= 7.3295201 %

Geometric mean for the period = 7.33 percent (approx)

Hope it helps!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A stock has annual returns of 5.4 percent, 12.9 percent, -3.8 percent, and 9.4 percent for...
A stock has annual returns of 5.4 percent, 12.9 percent, -3.8 percent, and 9.4 percent for the past four years. The arithmetic average of these returns is ________ percent while the geometric average return for the period is ________ percent.
A stock produced returns of 14 percent, 17 percent, and −10 percent over three of the...
A stock produced returns of 14 percent, 17 percent, and −10 percent over three of the past four years, respectively. The arithmetic average for the past four years is 6 percent. Show you work here (be as detailed and organized as possible): What is the missing return (i.e., the return in the fourth year)? What is the geometric average return over the four years? What is the standard deviation of returns of the stock? Show your work clearly below.
A stock had returns of 11.31 percent, −15.43 percent, 21.67 percent, 26.78 percent, and 10.12 percent...
A stock had returns of 11.31 percent, −15.43 percent, 21.67 percent, 26.78 percent, and 10.12 percent over the past five years. What was the geometric average return for this stock?
A stock had returns of 11.83 percent, −15.67 percent, 22.23 percent, 27.22 percent, and 10.88 percent...
A stock had returns of 11.83 percent, −15.67 percent, 22.23 percent, 27.22 percent, and 10.88 percent over the past five years. What was the geometric average return for this stock? 10.21% 11.75% 12.24% 11.30% 10.75%
6. A stock had returns of 11.44 percent, −15.49 percent, 21.81 percent, 26.89 percent, and 10.31...
6. A stock had returns of 11.44 percent, −15.49 percent, 21.81 percent, 26.89 percent, and 10.31 percent over the past five years. What was the geometric average return for this stock? 7.Three months ago, you purchased a stock for $53.21. The stock is currently priced at $56.27. What is the EAR on your investment?
Over a 50 year period an asset had an arithmetic return of 12.1 percent and geometric...
Over a 50 year period an asset had an arithmetic return of 12.1 percent and geometric return of 10 percent. Musing Blume’s formula, what is your best estimate of the future annual returns over 10 years? 15 years? 25 years?
You’ve observed the following returns on Barnett Corporation’s stock over the past five years: –27.3 percent,...
You’ve observed the following returns on Barnett Corporation’s stock over the past five years: –27.3 percent, 15.2 percent, 33.4 percent, 3.1 percent, and 22.1 percent. What was the arithmetic average return on the stock over this five-year period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Arithmetic average return % = What was the variance of the returns over this period? (Do not round intermediate calculations and round your...
You’ve observed the following returns on Yasmin Corporation’s stock over the past five years: 19 percent,...
You’ve observed the following returns on Yasmin Corporation’s stock over the past five years: 19 percent, –13 percent, 16 percent, 21 percent, and 10 percent. a. What was the arithmetic average return on the company's stock over this five-year period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) Average return            {C} {C}{C} % b-1 What was the variance of the company's stock returns over this period? (Do not...
You’ve observed the following returns on Barnett Corporation’s stock over the past five years: –29.1 percent,...
You’ve observed the following returns on Barnett Corporation’s stock over the past five years: –29.1 percent, 16.4 percent, 35.8 percent, 3.7 percent, and 22.7 percent. The average inflation rate over this period was 3.37 percent and the average T-bill rate over the period was 4.3 percent. What was the average real risk-free rate over this time period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average real risk-free rate...
8. A stock had returns of 16.11 percent, 23.82 percent, −11.53 percent, and 9.58 percent over...
8. A stock had returns of 16.11 percent, 23.82 percent, −11.53 percent, and 9.58 percent over four of the past five years. The arithmetic average return over the five years was 13.16 percent. What was the stock return for the missing year? 9. A stock had returns of 17.59 percent, −7.11 percent, and 23.81 percent for the past three years. What is the standard deviation of the returns?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT