Year | length (x) | (x-mean)^2 |
1 | 2.00% | 0.00030625 |
2 | -3.00% | 0.00455625 |
3 | -6.00% | 0.00950625 |
4 | 6.00% | 0.00050625 |
5 | 16.00% | 0.01500625 |
Sum | 15.00% | 0.02988125 |
Average return | 3.75% | |
variance | 0.0074703125 | |
standard deviation | 8.64% |
a)
arithmetic mean = 3.75%
b)
Geometric mean = [(1+2%) * (1-3%) * (1-6%) * (1+6%) * (1+16%)]^(1/5) - 1
= 2.72%
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