Destiny Corporation has experienced returns of 9%, 18%, 27% and -15% returns over the past four years. Given this information, calculate the company's geometric average returns.

A) 6.75%
B) 8.55%
C) 10.35%
D) 12.15%
E) 14.05%

Question

Huzaifah Al-Aqib Bin Farid Nasir G18B0008 · Accepted Answer

Final Answer : B, Explanation :  The geometric average return is calculated by multiplying the returns (expressed as a decimal plus one), taking the nth root (where n is the number of returns), and then subtracting one and converting back to a percentage. For Destiny Corporation, the calculation is as follows: [(1 + 0.09) * (1 + 0.18) * (1 + 0.27) * (1 - 0.15)]^(1/4) - 1 = 0.0855 or 8.55%.

Destiny Corporation has experienced returns of 9%, 18%, 27% and -15% returns over the past four years. Given this information, calculate the company's geometric average returns.

A) 6.75%
B) 8.55%
C) 10.35%
D) 12.15%
E) 14.05%

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Destiny Corporation has experienced returns of 9%, 18%, 27% and -15% returns over the past four years. Given this information, calculate the company's geometric average returns.A) 6.75%B) 8.55%C) 10.35%D) 12.15%E) 14.05%

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Destiny Corporation has experienced returns of 9%, 18%, 27% and -15% returns over the past four years. Given this information, calculate the company's geometric average returns.

A) 6.75%
B) 8.55%
C) 10.35%
D) 12.15%
E) 14.05%