Hey folks, An analyst observes the following four annual returns: R1= +10% R2= -15% R3= 0% R4= +5% The answer is -0.5%. But, I have no clue how to figure this one out. I thought it would have been 0%, but it’s not. Thanks for the help.
what’s the question?
i bet you its something like whats the mean return.
[(1.10)*(0.85)*(1)*(1.05)]^0.25 - 1 = -0.5%
I would say it is probably the geometric mean but hard to say without the question
hey kev why would it have to be quarters to use the geometric mean?
Ha! I had you guessing for a while! The question is: “The equivalent compound annual rate is:”
geo. kev did it.
Sometimes these questions have you guessing about what they want. Why didn’t they just say “geometric average”.