A stock has had returns of 8 percent, 26 percent, 18 percent, 14 percent, 26 percent, and 6 percent over the last six years. What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Solution
Stock Returns Count Arithmetic Returns 8 1 26 1 18 1 -14 1 26 1 -6 1 58 6 9.67 (58/6) Stock Returns Geometric Returns 8 0.08 1.08 26 0.26 1.26 18 0.18 1.18 -14 -0.14 0.86 26 0.26 1.26 -6 -0.06 0.94 [(1.08*1.26*1.18*0.86*1.26*0.94)^1/6]-1 0.0854559235 8.55%
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Calculate Arithmetic and Geometric Returns for Stock over 6 Years
1. A stock has had returns of 8 percent, 26 percent, 18 percent, 14 percent, 26 percent, and 6
percent over the last six years. What are the arithmetic and geometric returns for the stock? (Do
not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal
places, e.g., 32.16.)
Arithmetic return %
Geometric return %
Solution
Stock Returns Count Arithmetic Returns 8 1 26 1 18 1 -14 1 26 1 -6 1 58 6 9.67 (58/6) Stock
Returns Geometric Returns 8 0.08 1.08 26 0.26 1.26 18 0.18 1.18 -14 -0.14 0.86 26 0.26 1.26 -6
-0.06 0.94 [(1.08*1.26*1.18*0.86*1.26*0.94)^1/6]-1 0.0854559235 8.55%
![A stock has had returns of 8 percent, 26 percent, 18 percent, 14 percent, 26 percent, and 6
percent over the last six years. What are the arithmetic and geometric returns for the stock? (Do
not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal
places, e.g., 32.16.)
Arithmetic return %
Geometric return %
Solution
Stock Returns Count Arithmetic Returns 8 1 26 1 18 1 -14 1 26 1 -6 1 58 6 9.67 (58/6) Stock
Returns Geometric Returns 8 0.08 1.08 26 0.26 1.26 18 0.18 1.18 -14 -0.14 0.86 26 0.26 1.26 -6
-0.06 0.94 [(1.08*1.26*1.18*0.86*1.26*0.94)^1/6]-1 0.0854559235 8.55%](https://image.slidesharecdn.com/astockhashadreturnsof8percent-26percent-18percent-14perce-230203012633-20f4aaa0/85/a-stock-has-had-returns-of-8-percent-26-percent-18-percent-14-percedocx-1-320.jpg)
