In: Finance
A stock has had returns of 10 percent, 8 percent, -25 percent over the last three years, respectively. What is the geometric mean return for this stock?(Enter your answers as a percentage rounded to 2 decimal places. For example, enter 8.43% instead of 0.0843 )
Answer: | Units: |
Geometric mean return = [(1 + r1) × (1 + r2) × (1 + r3)]^1/3 − 1
Geometric mean return = [(1 + 0.10) × (1 + 0.08) × (1 - 0.25)]^(1/3) - 1
Geometric mean return = -0.0377 or -3.77%