Over a 40-year period, an asset had an arithmetic return of 11.2 perces and a geome...

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Over a 40-year period, an asset had an arithmetic return of 11.2 perces and a geome return of 9.4 percent Using Blumes formu

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Answer 1

Answer #1

R(T)= T-1 x Geometric average + .N-T --x Arithmetic average N-1 N -1

1.
=(5-1)/(40-1)*9.4%+(40-5)/(40-1)*11.2%
=11.02%

2.
=(10-1)/(40-1)*9.4%+(40-10)/(40-1)*11.2%
=10.78%

3.
=(20-1)/(40-1)*9.4%+(40-20)/(40-1)*11.2%
=10.32%

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Answer 2

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Over a 40-year period, an asset had an arithmetic return of 11.2 perces and a geome...

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Over a 40-year period, an asset had an arithmetic return of 11.2 perces and a geome...

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