Question

Roddy Richards invested​ $12014.88 in Wolverine Meat Distributors​ (W.M.D.) five years ago. The investment had yearly arithmetic returns of minus​9.7%, minus​8.1%, ​15%, 7.2%, and​ 15.4%. What is the arithmetic average return of Roddy​ Richard's investment?

Answer 1

The arithmetic average return would be 3.96%

Explanation:

Given,

The returns in 5 years are,

-​9.7%, -​8.1%, ​15%, 7.2%, and​ 15.4%

We know that,

`\text{Arithmetic average}=\frac{\text{Sum of all observations}}{\text{Number of observations}}`

Hence,

The arithmetic average return of the investment =
`(-9.7-8.1+15+7.2+15.4)/(5)`

`=(19.8)/(5)`

= 3.96%