Exercise 2 - Find the Arithmetic Average and Geometric Average Arithmetic Average = Geometric Average = Year Ri 1+Ri 1 3% 2 15% 3 -2% 4 -9% 5 8% 6 -13% 7 20% PRODUCT: PRODUCT to the power of (1)= PRODUCT to the power of (1) - 1= Formulas Var(R) = [CR, - R + ... + (R, -R-1 T-1 geometric average Geometric Average Return =[(1+R,)*(1+R, )x...x(1+R,,)}' -1