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NEW QUESTION: 1
A stock has the following returns over 4 years: +5%, -6%, +8%, +3%. The annual arithmetic and geometric rates of return over the 4 years are:
A. 10%; 9.79%
B. 5%; 5.57%
C. 2.5%; 9.79%
D. 2.5%; 2.36%
Answer: D
Explanation:
Explanation/Reference:
Explanation:
The mean equals (5% + (-6%) + 8% + 3%)/4 = 2.5%
The geometric mean equals (1.05 * 0.94 * 1.08 * 1.03)