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The arithmetic average return for a stock that had annual returns of 8 percent, 2 percent, and 11 percent for the past 3 years is (C) 7%.
What is the arithmetic average return?
- The Arithmetic Average Return is computed by adding the rates of return from the "n" sub-periods and dividing the result by "n."
- In other words, the average return is calculated by adding the returns of "n" sub-periods and then dividing by "n."
- The arithmetic average return is the return on investment computed by adding all sub-period returns and then dividing by the total number of periods.
To find the arithmetic average return for a stock that had annual returns of 8 percent, 2 percent, and 11 percent for the past 3 years:
Add all the return percentages and divide them by 3 as follows:
[tex]\frac{8+2+11}{3} =7[/tex]
Therefore, the arithmetic average return for a stock that had annual returns of 8 percent, 2 percent, and 11 percent for the past 3 years is (C) 7%.
Know more about the arithmetic average return here:
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The question you are looking for is given here:
What is the arithmetic average return for a stock that had annual returns of 8 percent, 2 percent, and 11 percent for the past 3 years?
(A) 8%
(B) 6%
(C) 7%
(D) 5%
