Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ten annual returns are listed in the following table: ( Click on the following icon in order to copy its contents into a spreadsheet. )
Ten annual returns are listed in the following table:Click on the following icon in order to copy its contents into a spreadsheet.
negative
negative
negative
negative
a What is the arithmetic average return over theyear period?
b What is the geometric average return over theyear period?
c If you invested $ at the beginning, how much would you have at the end?
Question content area bottom
Part
a What is the arithmetic average return over theyear period?
The arithmetic average return over theyear period is
enter your response hereRound to two decimal places.
Part
b What is the geometric average return over theyear period?
To find the geometric average return, use the following formulas.
First find the future value of investing $ today, using the following formula:
FV equals $ times left parenthesis left parenthesis plus Upper R right parenthesis times left parenthesis plus Upper R right parenthesis times times times times times left parenthesis plus Upper R Subscript Upper T right parenthesis right parenthesis
Then use the following formula and solve for R:
FV equals $ times left parenthesis plus Upper R right parenthesis Superscript
The geometric average return, R over theyear period is
enter your response hereRound to four decimal places.
Part
c If you invested $ at the beginning, how much would you have at the end?
If you invested $ at the beginning, at the end you would have $
enter your response here. Round to the nearest cent.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started