You own a stock that had returns of 13.17 percent, −16.64 percent, 22.46 percent, and 20.69 percent over the past four years. What was the arithmetic average return for this stock?
You own a stock that had returns of 13.17 percent, −16.64 percent, 22.46 percent, and 20.69 percent over the past four years. What was the arithmetic average return for this stock?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You own a stock that had returns of 13.17 percent, −16.64 percent, 22.46 percent, and 20.69 percent over the past four years. What was the arithmetic average return for this stock?
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Step 1
The arithmetic average return is a measure of the mean, or average, of a set of returns. It is calculated by adding up the returns for each period, and then dividing the total by the number of periods. This gives us a measure of the average return for the stock over the given time period.
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