CFA Practice Question

CFA Practice Question

Over 6 months, a stock has monthly returns of 2.3%, -5.9%, 3.2%, 7.5%, -1.1%, and -1.6%. What is the geometric mean return over the 6 months?
A. 0.73%
B. 0.64%
C. 4.40%
Explanation: Mean Geometric Return = ((1+r1)*(1+r2)*(1+r3)*(1+r43)*(1+r5)*(1+r6))(1/6) - 1, where r1, r2 etc. are returns.

User Contributed Comments 4

User Comment
tijean25 Where are the returns on this?
I need someone to show how to get to that result
enetis kinda confused here. thought geometric mean does'nt work for negative returns
praj24 @enetis - if you look at the formula, you're adding 1 to the return. e.g -5.9%, therefore it'll be 1-0.059 = 0.941

((1.023)(0.941)(1.032)(1.075)(0.989)(0.984))^1/6 - 1 *100 = 0.64%
Rohule im confused since its montly returns and ther formula noes not need exponetial, i thought that was only for anual returns
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