Question

2. Consider an investment of $100,000 that declined to a value of $50,000 at the end...

2. Consider an investment of $100,000 that declined to a value of $50,000 at the end
of Year 1 and then rebounded back to its original $100,000 value at the end of Year
2. The rate of return for this investment per year for the two-year period is 0
because the starting and ending value of the investment is unchanged.
a. Calculate the arithmetic mean of the yearly rates of return of this investment.
b. Calculate the geometric mean rate of return per year for the two years.

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