The geometric average quarterly return of ROM Company was 5 percent for the previous year.What was the return for the third quarter if the returns for the first,second,and fourth quarters were 10 percent,-9.05 percent,and 8 percent,respectively?
A) -6.18%
B) -7.05%
C) 11.05%
D) 12.50%

Question

Quizplus · Accepted Answer

The 3^rd quarter return = (1+5%)⁴/[(1+10%)*(1-9.05%)(1+8%)] -1 = 12.5%

The Geometric Average Quarterly Return of ROM Company Was 5