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 11 percent,14 percent,-2 percent and 6 percent?

• A)8.25%;8.15%
• B)8.25%;7.89%
• C)7.25%;7.37%
• D)7.25%;8.15%
• E)7.25%;7.08%

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Definitions:

Normal Curve

A bell-shaped curve that depicts the distribution of data points in a way where most of the observations cluster around the mean, showing the properties of symmetry and asymptotic tails.

Standard Deviation

A metric indicating the degree of spread or diversity among values in a dataset.

Mean

The average of a set of numbers, calculated by dividing the sum of all values by the total number of values.

Standard Normal Curve

A type of normal distribution that has a mean of 0 and a standard deviation of 1, represented graphically as a bell-shaped curve.