In: Finance
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?
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 |