Over the past four years, a portfolio experienced returns of -8%, 4% 17% and -12%. The geometric mean return of the portfolio over the four year period is closest to:
Define, calculate and interpret measures of central tendency, including the population mean, sample mean, arithmetic mean, weighted average or mean (including a portfolio return viewed as a weighted mean), geometric mean, harmonic mean, median, and mode.
Add one to each of the given returns, then multiply them together, then take the fourth root of the resulting product. 0.92 × 1.04 × 1.17 × 0.88 = 0.985121. 0.985121 raised to the 0.25 power is 0.996259. Subtracting one and multiplying by 100 gives the correct geometric mean return of ﹣0.37%.