Calculating average returns. Pg 321. The obvious way to calculate the average returns on the different investments in Table 10.1, pg. 318, is simply to add up the yearly returns and divide by the total number of years included (1925-2014 = 89 years). The result is the historical average of the individual values. Example for you to study: if you add up the returns (positive and negative) for the large-company common stocks for the 89 years, you will get about 10.77. (See Table 10.1 page 318). The average annual return is thus 10.77/89 = .121, or 12.1%. You interpret this 12.1 percent just like any other average. If you picked a year at random from the 89-year history and you had to guess what the return in that year was, the best guess would be 12.1 percent.So, your Question 3: If one adds up (hypothetical) small company common stocks 55 yearly returns (positive and negative) and they show a 11.43% average yearly return, what is small company common stocks average annual return over the 55 years? Show calculations!