Suppose at the beginning of 2012 you decide to invest $1,000 in Vanguard’s European Stock Index mutual fund. The following table shows the returns (in %) for the years 2012–2015.
Year . . . . . . . . . . . . . . Annual Return
2012 . . . . . . . . . . . . . . 17.3
2013 . . . . . . . . . . . . . . 19.6
2014 . . . . . . . . . . . . . . 6.8
2015 . . . . . . . . . . . . . . 8.2
a. Calculate and interpret the arithmetic mean return.
b. Calculate and interpret the geometric mean return.
c. How much money would you have accumulated by the end of 2015?
