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Calculate the geometric average return for the 3-year period

Suppose a particular investment earns a return of 10% in year 1, -5% (note MINUS 5%) in year 2, and 30% in year 3. Calculate the geometric average return for the 3-year period (Avg annual return).

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Year 1: A return of 10% is 0.10 as a decimal, for a factor of (1 + 0.10) = 1.10
Year 2: A return ...

Solution Summary

The solution calculates the geometric average return for the 3-year period. The expert supposes a particular investment earns a return of 10% in year 1.

$2.19