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Five years of realized returns for BLM are given in the following table.

1. While BLM was started 40 years ago, its common stock has been publicly traded for the past 25 years.
2. The returns on its equity are calculated as arithmetic returns.
3. The historical returns for BLM for 2012 to 2016 are:

2012 2013 2014 2015 2016
Stock return 6.25% 4.25% 7.50% 10.50% 3.25%

Given the preceding data, the average realized return on BLM's stock is _______.

Respuesta :

Answer:

The correct answer is 6.35%.

Explanation:

According to the scenario, the given data are as follows:

Stock return for 2012 = 6.25%

Stock return for 2013 = 4.25%

Stock return for 2014 = 7.50%

Stock return for 2015 = 10.50%

Stock return for 2016 = 3.25%

Number of years = 5

So, we can calculate the average return by using following formula:

Average return = Sum of all stock return ÷ Number of years

= (6.25% + 4.25% + 7.50% + 10.50% + 3.25%) ÷ 5

= 31.75% ÷ 5

= 6.35%