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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Answer #1
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