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The S&P 500 index delivered a return of 20%, 10%, -20%, and - 10% over four successive years. What is the arithmetic average

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Answer #1

Arithmetic average rate of return is calculated by using the below formula:

Arithmetic average rate of return= Sum of individual return/ Total number of returns

= 20% + 10% + -20% + -10%/4

= 0/4

= 0%.

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