A stock had returns of 13 percent, 11 percent, 8 percent, 14 percent, -9 percent, and -5percent over the past siX years. What is the geometric average return for this time period?()5.39%4.93%5.13%5.26%4.67%

Geometric Average: It is the average return for a set of values computed with the products of the…

Answered: s. What is the geometric average return…

s. What is the geometric average return for this time period?

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

8th Edition

ISBN:9781285065137

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter3: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 5DQ

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Concept explainers

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

A stock had returns of 13 percent, 11 percent, 8 percent, 14 percent, -9 percent, and -5
percent over the past siX years. What is the geometric average return for this time period?
()5.39%
4.93%
5.13%
5.26%
4.67%

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