On December 31, 2000, the S&P 500 index was 1,469.25. Twenty-one years later, on December 31, 2021,
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Question:
On December 31, 2000, the S&P 500 index was 1,469.25. Twenty-one years later, on December 31, 2021, the Index was 4766.18.
Determine the Geometric Average rate of return on the index for these 21 years.
Using the information from above, determine the arithmetic average rate of return for these 21 years.
Explain why there is a difference between the two returns in #'s 1 and 2 above.
Expert Answer:
1 Geometric Average Rate of Return To calculate the geometric average rate of return we use the ... View the full answer
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