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What is the geometric average?

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Stock XYZ

Year Return

2000 10%

2001 15%

2002 -20%

2003 -8%

2004 11%

What is the geometric average?

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Solution Preview

The formula for the geometric average of returns is:

( (1 + Ret1) * (1 + Ret2) * (1 + Ret3) * ...) ^ (1/n) - 1
[the ^ symbol ...

Solution Summary

With good explanations and calculations, the problem is answered.

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