CFA Practice Question

CFA Practice Question

The U.S. Federal Aviation Administration reported that passenger revenues on international flights increased from $528 million in 1983 to $5,100 million in 2006.

What is the geometric mean annual percent increase in international passenger revenues?
A. 27.9
B. 9.96
C. 10.36
Explanation: There are 23 years involved. The geometric mean is = [(1 + (5100 - 528)/528)1/23] - 1 = 0.1036 = 10.36%

User Contributed Comments 14

User Comment
ursula please help! not getting 10.36! thank you!
ursula nevermind...used (1/23) for y^x on hp, not 23 1/x
hannovanwyk PV= -528
FV= 5100
n= 23
Pmt= 0
i >>>>> 10.36
grezavi Nice trick hannovanwyk- forget the geometric return
uviolet nice trick. thanks hannoanwyk
adieu thanks hannovanwyk
jpducros other solution :
(1+ 5100/528)^1/24 -1
bkballa why is the number of yrs 23 and not 24?
soukhov geometric mean = CAGR
soukhov 23 = from end to end
24 = from begginning to end

revenues reported at the end -> 23
Procbaby1 528(1+x)^23=5100
santibanez Hp: 5100 enter
528/
1 enter
23/y^x
1-
cfastudypl Thanks hannovanwyk, very smart way of doing it, well done.
paddock20 Thank you hannovanwyk
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