Question

The rates of return on Cherry Jalopies, Inc., stock over the last five years were 14 percent, 11 percent, −1 percent, 3 percent, and 14 percent.

What is the geometric return for Cherry Jalopies, Inc.? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Answer 1

Returns over the last 5 years are 14%, 11%, -1%, 3% and 14%

Geometric Return = [(1+r1) * (1+r2) * (1+r3) * (1+r4) * (1+r5)]^(1/5) - 1
Geometric Return = [(1+0.14) * (1+0.11) * (1-0.01) * (1+0.03) * (1+0.14)]^(1/5) - 1
Geometric Return = 1.470974^(1/5) - 1
Geometric Return = 1.0802 - 1
Geometric Return = 0.0802 or 8.02%

So, geometric return for Cherry Jalopies, Inc. is 8.02%

Answer 2

answer will be 7.8% standard deviation .if return  is 17%,11%,-2%,3,14%.average return.084. variance=.024833