Question

the common stock of western hill farms has yielded 16.3 percent, 7.2 percent, 11.8 percent, -3.6 percent, and 9.9 percent over the past five years, respectively. what is the geometric average return?

Answer 1

The geometric average return of Western Hill Farms' common stock over the past five years is -23.66%.

Step-by-step explanation:

To find the geometric average return of Western Hill Farms' common stock over the past five years, we need to calculate the product of all the individual returns and then take the fifth root of that product.

To calculate the product, we multiply each return as a decimal:

• 16.3% = 0.163
• 7.2% = 0.072
• 11.8% = 0.118
• -3.6% = -0.036
• 9.9% = 0.099

The product is: (0.163) * (0.072) * (0.118) * (-0.036) * (0.099) = -0.00002067.

Finally, we take the fifth root of the product to find the geometric average return: (-0.00002067)^(1/5) = -0.2366 = -23.66%.