Arithmetic vs Geometric mean

This is bread & butter for most of you but have a go anyway The initial market value of a portfolio was $100,000. One year later the portfolio was valued at $90,000 and two years later at $99,000. The portfolios arithmetic and geometric mean annual returns excluding any dividend income is Arith Geo a -1.0% 0% b -1.0% 0.5 c 0% -0.5 d 0% 0


how did you get c?

Geometric mean is -.5 and Gm is always less than AM… What is the answer?

down 10% then up 10% That means arithmetic mean (simple average) is 0. Geometric mean is (0.9*1.1)^0.5 -1

C. You guys are great.