Question

Using the following returns, calculate the average returns for Abundant and Slim Returns (96) Year |Abundant Slim 2006 2007 2008 8 -4 -6 7 2010 12 -9 2011 10 a. The average return for Share Abundant is 5.4% and 2.8% for Share Slim O b. The average return for Share Abundant is 55% and 4 596 for Share Slim O c. The average return for Share Abundant is 4.83% and 5.83% for Share Slim O d. The average return for Share Abundant is 5.83% and 4.83% for Share slim.

Answer 1

Arithmetic Average Return = (r₁ + r₂ + r₃ +…+ r_n)/n

Where r₁, r₂ …r _n = Return in the period 1, 2 …n respectively

n = No. of periods

	Returns (%)
Year	Abundant	Slim
1	8	15
2	5	-4
3	-6	-9
4	7	11
5	12	6
6	9	10
Total Return	35	29
Average Return	5.83	4.83

Arithmetic Average Return for Abundant = 35 %/6 = 5.8333333 % or 5.83 %

Arithmetic Average Return for Slim = 29 %/6 = 4.8333333 % or 4.83 %

Hence option “d. The average return for share Abundant is 5.83% and 4.83% for Share Slim” is correct answer.