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Determine the geometric average rate of return

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On December 31, 2000, the S&P 500 index was 1,469.25. Twenty-one years later, on December 31, 2021, the Index was 4766.18.

Determine the Geometric Average rate of return on the index for these 21 years.

Using the information from #1 above, determine the arithmetic average rate of return for these 21 years.

Explain why there is a difference between the two returns in #'s 1 and 2 above.

Reference no: EM133122582

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