Does anybody know how to calculate geometric mean in Texas BAII Plus? Thank you.
Really simple (Example): Last three yrs, returns for a company’s common stock have been -9.34%, 23.45% and 9.82%. Compute the compound annual rate of return over the three yr period.
1. 1 + R(G) = [(-.0934+1) x (.2345+1) x (.0892+1)]…..multiply all together and you get 1.2190
then to the calculator…
2. 1.2190 [y^x] 0.33333 [=] 1.0682
3. 1.0682 - 1 = .0682 => R(G) = 6.82%
BTW, you can use [1/x] in this case. Like this:
1.2190 [y^x] 3 [1/x] [=]
AnalystForum is an online community designed exclusively for CFA candidates and charterholders to discuss the Chartered Financial Analyst program.