A stock has had returns of 19.0 percent, 29.0 percent, 24.0 percent, 10.1 percen

Question

A stock has had returns of 19.0 percent, 29.0 percent, 24.0 percent, 10.1 percent, 34.8 percent, and 27.0 percent over the last six years.

Required:

What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

  Arithmetic average return

%

  Geometric average return

%

A stock has had returns of 19.0 percent, 29.0 percent, 24.0 percent, 10.1 percent, 34.8 percent, and 27.0 percent over the last six years.

Explanation / Answer

The arithmetic average return is the sum of the known returns divided by the number of returns, so:

Arithmetic average return = (-.19 + .29 + .24

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