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EXERCISE #5: Multiply the starting price by the right term that uses the compound average to show that the arithmetic mean does not recover the
EXERCISE #5: Multiply the starting price by the right term that uses the compound average to show that the arithmetic mean does not recover the final price while the geometric and continuous means do. Convert the percent averages to fractions. \$53. 07(1+arithmean)3=53.07(1+..)3=$ $53.07(1+geommean)3=53.07(1+.)3=$ $53.07econtmean3=53.07e.3. Remember that you will not get the terminal value 55.08 right with the arithmetic average. EXERCISE #5: Multiply the starting price by the right term that uses the compound average to show that the arithmetic mean does not recover the final price while the geometric and continuous means do. Convert the percent averages to fractions. \$53. 07(1+arithmean)3=53.07(1+..)3=$ $53.07(1+geommean)3=53.07(1+.)3=$ $53.07econtmean3=53.07e.3. Remember that you will not get the terminal value 55.08 right with the arithmetic average
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