A stock originally purchased exactly 6 years ago for $231.00 per share is currently valued at...
A stock originally purchased exactly 6 years ago for $231.00 per share is currently valued at $318.25 per share - what is the Geometric Mean Return generated by this investment since its original purchase date (assume annual compounding)?
-4.6%
6.3%
5.8%
-5.2%
5.2%
0.4%
5.5%
Homework Answers
Original Purchase Price = P0 = $231.00
Current Purchase Price = P1 = $318.25
Let geometic return = r
n = 6 years
P1 = P0 *(1+r)^n
$318.25 = $231.00 * (1+r)^6
(1+r)^6 = 1.37770563
1+r = 1.05485494
r = 0.05485494
Therfore, geometric return is 5.50%
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