Question

Gary invested $1,000 in large U.S. stocks. This investment earned 15.05 percent in 2012, 33.35 percent in 2013, 11.50 percent in 2014, and 2.10 percent in 2015. What return did he earn in the average year during the 2012–2015 period?

Answer 1

The answer is: Average return Gary earned is 14.97%.

Step-by-step explanation:

Please find the below for detailed explanation and calculations:

The total increase of Gary's investment in large U.S. stocks from 2012 to 2015 is calculated as : (1+15.05%) x (1+33.35%) x (1+11.50%) + (1+ 2.10%) = 1.747 times. That is, he will get 1,000 x 1.747 = $1,747 at the end of 2015.

The average return of Gary's investment in large U.S. stocks from 2012 to 2015 ( 4 year period) is: [ (The fourth root of 1.747) - 1] x 100% =14.97%.