Question

Your portfolio has provided you with returns of 8.6 percent, 14.2 percent, -3.7 percent, and 11.4 percent over the past four years, respectively. what is the geometric average return for this period

Answer 1

The average annual return is ...

`\sqrt[3]{(1+0.142)(1-0.037)(1+0.114)}-1=\sqrt[3]{1.225117044}-1\\\\ \approx 1.0700-1=7.0\%`