A stock had returns of 8%,12%,-11%,and 17% over the past four years.What is the geometric average return for this time period?
A)4.5%
B)5.7%
C)5.9%
D)7.3%
E)8.2%

Question

Quizplus · Accepted Answer

To calculate geometric average return, we multiply all the returns and take the nth root, where n is the number of years. 
In this case, the calculation is: 
Geometric average return = (1.08*1.12*0.89*1.17)^(1/4) - 1 = (1.2713)^(1/4) - 1 = 0.059 ≈ 5.9%
Therefore, the answer is (C) 5.9%.

A Stock Had Returns of 8%,12%,-11%,and 17% Over the Past