$\begin{array}{|c|c|}
\hline \text { Year } & \begin{array}{c}
\text { Return } \
\mathbf{( \% )}
\end{array} \
\hline \text { Year } 1 & 7 \% \
\hline \text { Year } 2 & 17 \% \
\hline \text { Year } 3 & -2.4 \% \
\hline \text { Year } 4 & 2 \% \
\hline
\end{array}$
-The value of an investment at the end of each of four years is shown above.What is the arithmetic average return over the four years?
A) $-5.75 \%$
B) $4.00 \%$
C) $4.25 \%$
D)$5.90\%$

Question

Quizplus · Accepted Answer

Using equation 1.11,page 18,the arithmetic cumulative return for the investment over the four years is calculated as (0.07 + 0.17 - 0.024 + 0.02)= 0.236 or 23.6%.As per example 1.10,page 18,the arithmetic average return is found by dividing the cumulative return by the number of years,or 0.236/4 = 0.059 or 5.90% per annum.

-The Value of an Investment at the End of Each