Quantitative Methods Q96

96An analyst computes the geometric mean of a portfolio that has yearly returns of: -8%, 2%, -4%, 7%, and 12%. The geometric mean computed by the analyst is closest to:

Option : A
Explanation : Geometric mean= RG=[(1 + R1)(1 + R2)…(1 + Rn)] /n – 1
Geometric Mean=[(1-0.08)*(1+0.02*(1-0.04)*(1+0.07)*(1+.12)]/15-1=1.5%

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