A stock has an average arithmetic return of 10.55 percent and an average geometric return of 10.41 percent based on the annual returns for the last 15 years.What is projected average annual return on this stock for the next 10 years?
A) 10.17 percent
B) 10.21 percent
C) 10.38 percent
D) 10.46 percent
E) 10.79 percent

Question

Quizplus · Accepted Answer

Projected return = {[(10 - 1) / (15 - 1)] × 0.1041} + {[(15 - 10) / (15 - 1)] × 0.1055} = 10.46 percent

A Stock Has an Average Arithmetic Return of 10