Over the past six years, the returns to Green Country Energy stock has been: 14 percent,...

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Question

Answer 1

Answer #1

Below is the formula used to calculate geometric average return:

1+Rg= (1+R1)* (1+R2)*(1+R3)…………….(1+Rn) ^ 1/n

1+Rg= (1 + 0.14)*(1 - 0.07)*(1 + 0.17)*(1 + 0.15)*(1 + 0.02)*(1 - 0.10)

1+Rg= 1.14*0.93*1.17*1.15*1.02*0.90^1/6

1+Rg= 1.3095^1/6

1+Rg= 1.0460

Rg= 1.0460 - 1

= 0.0460*100

= 4.60%.

Hence, the answer is option e.

In case of any query, kindly comment on the solution.

Answer 2

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