contestada

what are the arithmetic and geometric average returns (answer in that order.) for a stock with annual returns of 4 percent, 9 percent, −6 percent, and 18 percent? multiple choice 5.89 percent; 6.25 percent 6.25 percent; 5.89 percent 6.25 percent; 8.33 percent 8.33 percent; 5.89 percent 8.33 percent; 8.33 percent

Respuesta :

The arithmetic average return is  6.25 percent and the geometric average return is 5.89 percent

What is the arithmetic and geometric average return?

The arithmetic average return can be determined by adding the stock returns together and dividing it by the total annual returns that is provided.

Arithmetic average return = sum of returns / total number of returns

(4 + 9 - 6 + 18) / 4

= 25 / 4 = 6.25 percent

The geometric average return is used to determine the compound growth rate.

Geometric average return= [(1 + return) x (1 + return) x (1 + return) + (1 + return)]^(1/n) -  

Where:

n = number of returns provided

[(1.04) x (1.09) x (0.94) x (1.18)]^(1/4) - 1 = 0.0589 = 5.89%

To learn more about geometric average return, please check: https://brainly.com/question/28562900

#SPJ1