What Are the Arithmetic and Geometric Average Returns for a Stock

question 56

Multiple Choice

What are the arithmetic and geometric average returns for a stock with annual returns of 5%,8%,-3%,and 16%?

• A) 6.5%; 6.28%
• B) 6.5%; 9.21%
• C) 9.3%; 6.28%
• D) 9.3%; 9.21%
• E) 10.25%; 8.31%

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Definitions:

Midrange

The statistical measure calculated by taking the average of the highest and lowest values in a data set.

Mode

The value that appears most frequently in a data set.

Sample Mean

The average value calculated from a sample, intended to estimate the population mean from which the sample was drawn.

Sample

A subset of a larger population selected for measurement or observation, intended to represent the larger group.