Question

Your grandfather invested $1,000 in a stock 31 years ago. currently the value of his account is $319,000. what is his geometric return over this period?

Answer 1

Holding period return that is HPR = (FV / PV)^1/N - 1 where FV is future value of $319000 PV is present value of $1,000 N is 45 years and subtract 1 (319000 / 1,000)^(1/31) - 1 is 13.38% Therefore, grandfather's geometric return is 10.29% if he invested 31 years ago.