Essentials of Corporate Finance
Essentials of Corporate Finance
8th Edition
ISBN: 9780078034756
Author: Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 10, Problem 20QP
Summary Introduction

To determine: The arithmetic and geometric average return.

Introduction:

Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset.

Arithmetic average return refers to the returns that an investment earns in an average year over different periods.

Geometric average return refers to the return after compounding the average returns for multiple years.

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Essentials of Corporate Finance

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