Question

Calculate the geometric average return earned by an investor over three years if she earned 6% in the first year of an investment, 12% in the second year and 10% in the third year.

Answer 1

8.96%

Step-by-step explanation:

`\sqrt[(1)/(n) ]{x1. x2.x3...}` = geometric average return

n = number of observations

x1 = observations

(0.06 x 0.12 x 0.1)^(1/3) = 0.0896 = 8.96%