Answer: a) 8.67%, b) 7.64%.
Step-by-step explanation:
Since we have given that
Stock has returns is given by
11 percent, 18 percent, 20 percent, −13 percent, 25 percent, and −9 percent
Number of years = 6
Arithmetic average returns for the stock is given by

Geometric average returns for the stock is given by
![[(1+0.11)\times (1+0.18)\times (1+0.20)\times (1-0.13)\times (1+0.25)\times (1-0.09)]^{\frac{1}{6}}-1\\\\=[1.11\times 1.18\times 1.20\times 0.87\times 1.25\times 0.91]^{\frac{1}{6}}-1\\\\=7.64\%](https://tex.z-dn.net/?f=%5B%281%2B0.11%29%5Ctimes%20%281%2B0.18%29%5Ctimes%20%281%2B0.20%29%5Ctimes%20%281-0.13%29%5Ctimes%20%281%2B0.25%29%5Ctimes%20%281-0.09%29%5D%5E%7B%5Cfrac%7B1%7D%7B6%7D%7D-1%5C%5C%5C%5C%3D%5B1.11%5Ctimes%201.18%5Ctimes%201.20%5Ctimes%200.87%5Ctimes%201.25%5Ctimes%200.91%5D%5E%7B%5Cfrac%7B1%7D%7B6%7D%7D-1%5C%5C%5C%5C%3D7.64%5C%25)
Hence, a) 8.67%, b) 7.64%.
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