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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Chapter 12, Problem 15QP

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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