A stock has had returns of 16 percent, 13 percent, 6 percent, -14 percent, -6 pe

Question

A stock has had returns of 16 percent, 13 percent, 6 percent, -14 percent, -6 percent, and 18 percent over the last six years. What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places

A stock has had returns of 16 percent, 13 percent, 6 percent, -14 percent, -6 percent, and 18 percent over the last six years. What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places

Explanation / Answer

arithmetic return for the stock = 5.50%

geometric return for the stock = (1.16*1.13*1.06*0.86*0.94*1.18)^1/6 - 1

geometric return for the stock = 4.81%

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