Averages best reflects historical performance

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The stock had returns of -50% and +100% in two consecutive years. If the initial stock was $100, what is it at the end of the first and second year? In the first year you invest in 1 share, in the second year in another 2 shares

Find:

  1. Arithmetic Average
  2. Geometric Average
  3. Dollar Weighted Average

Which of the averages best reflects historical performance over long time?

Given above data, what return would be reasonably expected for the third year?

Reference no: EM132478107

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