# Geometric Mean (example question)

Geometric Mean (example question)

The prices of five computer stocks increased by 37.2 %, 1,140.0 %, 2.7 %, 842.0% and 0.95 %, respectively since 1990. Compute the geometric mean rate of return for the five stocks.

(Hint: First convert percents to decimal equivalent)

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#### Solution Preview

Formula for the geometric mean rate of return is given by:

<br>

<br>geometric mean rate of return

<br>= [[(1+R1)x(1+R2)x(1+R3)x...x(1+Rn)]^(1/n) ...

#### Solution Summary

Geometric Mean example question is dissected.

$2.49