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Assume the stock market falls by 37% in a year. How long would it take the index to reach its initial level of 100% if
Assume the stock market falls by 37% in a year. How long would it take the index to reach its initial level of 100% if the average rate of return is 10% per year? (Show work)
Hint: This is the concept of geometric average. The 10% should be treated as a geometric average rather than arithmetic average. The geometric average takes into account the compounding effect.
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