What are the arithmetic and geometric average returns

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Reference no: EM131974301

1. A stock has had returns of 29 percent, 14 percent, 23 percent, –8 percent, 9 percent, and –14 percent over the last six years. What are the arithmetic (AAR) and geometric (GAR) average returns for the stock?

B. AAR = 7.69%, GAR = 8.83%

A. AAR = 16.17%%, GAR = 15.52%

D. AAR = 8.83%, GAR = 7.69%

C. AAR = 8.83%, GAR = 8.83%

2. Consider the following information on three stocks A, B and C: State of Probability of Rate of Return Economy State Occurring A B C Boom .2 .20 .35 .60 Normal .6 .15 .12 .05 Bust .2 .01 -.25 -.50 If your portfolio is invested 30 percent each in A and B and 40 percent in C, what is the portfolio expected return? The variance? The standard deviation?

B. 4.30%, .08001, 28.29%

A. 9.16%, .08001, 28.29%

C. 9.16%, .03882, 19.70%

D. 8.72%, .04612, 21.48%

Reference no: EM131974301

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