A stock has produced returns of 14.5 percent, 4.8 percent, 10.2 percent, and 6.1 percent over the past four years respectively. what is the geometric average return?
The geometric average return is the the nth root of the product of the stock returns.
So we have nâš r1 * r2 * r3. Where n is the number of returns.
So we have 4âš(14.5 * 4.8 * 10.2 * 6 1)
This gives us 4âš ( 4330.512)
The fourth root of 4330.512 is 8.1121 percent.
