Question

Find the average rate of return for six different stocks (stock 1: 5%; stock 2: 7%; stock 3: 8%; stock 4: 4.5%; stock 5: 9%; stock 6: 5%) rounded to the nearest hundredth.

Answer 1

Average return is obtained by summation of all the stock returns and dividing it by the total number of stocks. In these case there are total of 6 stocks. The total return from these 6 stocks is 40. Therefore, the average return is obtained by dividing 40 with 6. Hence the average return is 6.6%.