Question: could you please explain how it was calculated Using the annual returns for years 3-5 in $ Spreadsheet 5.2 a. Compute the arithmetic average return.


could you please explain how it was calculated
Using the annual returns for years 3-5 in $ Spreadsheet 5.2 a. Compute the arithmetic average return. b. Compute the geometric average return. c. Compute the standard deviation of returns. d. Compute the Sharpe ratio, assuminq the risk-free rate was 6% per vear. 5. a. Arithmetic return =(1/3)(.2869)+(1/3)(.1088)+(1/3)(0.0491) =.1483=14.83% b. Geometric average =(1.28691.10881.0491)1/31=.1439 =14.39% c. Standard deviation =12.37% d. Sharpe ratio =(14.836.0)/12.37=.71
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