Leeanne owns a stock that has an average geometric return of 12.30 percent and an average arithmetic return of 12.55 percent over the past six years.What average annual rate of return should Leeanne expect to earn over the next four years?
A) 12.38 percent
B) 12.40 percent
C) 12.44 percent
D) 12.47 percent
E) 12.51 percent

Question

Quizplus · Accepted Answer

Projected return = {[(4 - 1) / (6 - 1)] × 0.1230} + {[(6 - 4) / (6 - 1)] × 0.1255} = 12.40 percent

Leeanne Owns a Stock That Has an Average Geometric Return