What Are the Arithmetic and Geometric Average Returns for a Stock

question 4

Multiple Choice

What are the arithmetic and geometric average returns for a stock with annual returns of 21%,8%,-32%,41%,and 5%?

• A) 5.6%; 8.6%
• B) 5.6%; 6.3%
• C) 8.6%; 5.6%
• D) 8.6%; 8.6%
• E) 8.6%; 6.3%

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Definitions:

Accounting

The information system that identifies, records, and communicates the economic events of an organization to interested users.

Revenue Account

An account that tracks the income generated from normal business operations, such as sales of goods or services.

Credited

A bookkeeping record that augments liabilities or equity, or diminishes an asset or expense.