Question

In: Finance

An investment has returned 10%, 1%, -1%, 0%, and 16% in each of the last five...

An investment has returned 10%, 1%, -1%, 0%, and 16% in each of the last five years. If we decide to use historical returns as a proxy for expected future returns, what is the expected rate of return?

Solutions

Expert Solution

Ans 5.20

YEAR RETURN
1 10
2 1
3 -1
4 0
5 16
Total 26
Expected Return = Total Return / NO of years
26 / 5
5.20

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