2.Consider an investment with the returns over 4 years as shown here:

Year	1	2	3	4
Return	14%	6%	7%	18%

.

a. What is the compound annual growth rate (CAGR) for this investment over the 4 years?

b. What is the average annual return of the investment over the 4 years?

c. Which is a better measure of the investment's past performance? If the investment's returns are independent and identically distributed, which is a better measure of the investment's expected return next year?

a. What is the compound annual growth rate (CAGR) for this investment over the 4 years?

The compound annual growth rate is __________

(Round to two decimal places.)

b. What is the average annual return of the investment over the 4 years?

The average annual return is___________.

(Round to two decimal places.)

c. Which is a better measure of the investment's past performance? If the investment's returns are independent and identically distributed, which is a better measure of the investment's expected return next year?(Select from the drop-down menus.)

_____________

A.CAGR

B. Arithmetic average

is a better measure of the investment's past performance while

___________ A. arithmetic average B.CAGR

is a better measure of the investment's expected return next