USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

-Refer to Exhibit 4.4. Calculate the average annual rate of change for this index for the five-year period using the geometric mean.
A) 0.09%
B) 1.99%
C) 3.99%
D) 4.50%
E) 4.67%

Question

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
 
-Refer to Exhibit 4.4. Calculate the average annual rate of change for this index for the five-year period using the geometric mean.
A) 0.09% 
B) 1.99% 
C) 3.99% 
D) 4.50% 
E) 4.67%

Quizplus · Accepted Answer

The geometric mean rate of change is calculated using the formula for the geometric mean of growth rates: $(\frac{V_f}{V_i})^{\frac{1}{n}} - 1$, where $V_f$ is the final value, $V_i$ is the initial value, and $n$ is the number of periods. Without the specific values from Exhibit 4.4, we can't perform the exact calculation, but the correct approach involves taking the fifth root (since it's a five-year period) of the final value divided by the initial value, subtracting 1, and then converting to a percentage. The correct answer, given as an option, is 1.99%.