Question

In: Finance

The geometric average of −16%, 25%, and 30% is _________.

The geometric average of −16%, 25%, and 30% is _________.

Multiple Choice

  • 10.93%

  • 23.53%

  • 9.75%

  • 13.00%

Solutions

Expert Solution

R1 = -16%

R2 = 25%

R3 = 30%

Geometric average = [(1 + R1) * (1 + R2) * (1 + R3)]^(1/3) - 1

= [(1-0.16)*(1+0.25)*(1+0.3)]^(1/3) -1

= 1.365^(1/3) -1

= 0.1093

= 10.93%

Correct choice A

jeff jeffy answered 2 years ago
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