Question

Spill Oil Company's stocks had -8%, 11%, and 24% rates of return during the last three years respectively; calculate the average rate of return for the stock.

Option 1: 9%
Option 2: 10.5%
Option 3: -7%
Option 4: 15.5%

Answer 1

The average rate of return for Spill Oil Company's stock over the last three years is calculated by summing the rates of -8%, 11%, and 24% and then dividing by 3, resulting in an average of 9%.

Step-by-step explanation:

To calculate the average rate of return for Spill Oil Company's stocks over the past three years, we need to average the three given rates of return: -8%, 11%, and 24%. The sum of the rates is -8 + 11 + 24, which equals 27. To find the average, we divide this sum by the number of values, which is 3.

The calculation for the average rate of return is as follows:

27% ÷ 3 = 9%

Therefore, the average rate of return for Spill Oil Company's stock over the last three years is 9%, which corresponds to Option 1.