For a 5-year period, a stock had annual returns of 6.4 percent, -11.2 percent, 0.3 percent, 19.8 percent, and 13.4 percent.

For a 5-year period, a stock had annual returns of 6.4 percent, -11.2 percent, 0.3 percent, 19.8 percent, and 13.4 percent. What is the arithmetic average return?

Group of answer choices

A. 5.74 percent
B. 6.28 percent
C. 7.18 percent
D. 5.18 percent
E. 7.09 percent

Correct answer is option A. 5.74 percent.

Explanation:

Given us, the annual returns of 6.4 percent, -11.2 percent, 0.3 percent, 19.8 percent and 13.4 percent for a 5 year period.

We need to find the Arithmetic average return.

We know that, Arithmetic average return = `\frac{("R"_{1}+"R"_{2}+"R"_{3}...+"R"_{"n"})}{"n"}`

Where R1, R2 and Rn is the returns relating to sub periods and n is the total number periods.

Hence, =`"(6.4+(-11.2)+0.3+19.8+13.4)"/"5"`

Arithmetic average return = `"28.7"/"5"`

Thus, the value of Arithmetic average return = 5.74 percent