The Geometric Average Annual Return for a Large Capitalisation Share

question 6

Multiple Choice

The geometric average annual return for a large capitalisation share portfolio is 12% for ten yearsand 5% per year for the next five years. The geometric average annual return for the entire 15-year period is

• A) 10.23%.
• B) 9.11%.
• C) 9.62%.
• D) 9.95%.

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Definitions:

Black

A color which is the result of the absence or complete absorption of visible light.

Probability

The numerical rating, from 0 to 1, indicating the chance an event will happen.

Fair Die

A die that is perfectly balanced, ensuring that each of its faces has an equal likelihood of landing up when thrown.

Probability

A rephrased definition: A statistical metric that quantifies the chance that a specific event or outcome will happen.