Over the Last Four Years, a Stock Has Had an Arithmetic

question 6

Multiple Choice

Over the last four years, a stock has had an arithmetic average return of 12.8 percent.Three of those four years produced returns of 22.6 percent, 15.2 percent, and -24.1 percent, respectively.What is the geometric average return for this four-year period?

• A)10.18 percent
• B)8.39 percent
• C)11.67 percent
• D)12.40 percent
• E)12.67 percent

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Definitions:

Business Plan

A document that outlines the operational and financial objectives of a business, and details the strategies and timelines for achieving these goals.

Small Business Development Center

A local resource that provides aspiring and existing small business owners with business training, consulting, and support, often funded by government and educational institutions.

Breakeven Point

The financial point at which costs equal revenues, such that no profit is made but no losses are incurred either.

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A business concept that refers to the total revenue generated from goods or services sold and the expenses incurred in the production or delivery of those goods or services.