Louis Owns a Stock That Has an Average Geometric Return

question 22

Multiple Choice

Louis owns a stock that has an average geometric return of 10.50 percent and an average arithmetic return of 11.00 percent over the past six years.What average annual rate of return should Louis expect to earn over the next four years?

• A) 10.38 percent
• B) 10.40 percent
• C) 10.64 percent
• D) 10.70 percent
• E) 10.81 percent

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