You Own a Stock That Has Produced an Arithmetic Average

Multiple Choice

You own a stock that has produced an arithmetic average return of 8.6 percent over the past five years. The annual returns for the first four years were 16, 11, −19, and 3 percent, respectively. What was the rate of return on the stock in year five?

A) −5.00%
B) 2.75%
C) 6.25%
D) 28.00%
E) 32.00%