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7? You own a stock that had returns of 11.52 percent, −7.74 percent, 24.76 percent, and...

7?

You own a stock that had returns of 11.52 percent, −7.74 percent, 24.76 percent, and 16.94 percent over the past four years. What was the geometric average return for this stock?

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Answer #1

geometric average return=[(1+rate 1)(1+rate 2)(1+rate 3)(1+rate 4)]^(1/4)-1

=[(1+0.1152)(1-0.0774)(1+0.2476)(1+0.1694)]^(1/4)-1

which is equal to

=10.69%(Approx).

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