Thread: Average yearly return
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Old 11-13-2005, 08:54 PM
edtost edtost is offline
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Join Date: Feb 2004
Location: Princeton
Posts: 15
Default Re: Average yearly return
(price n yrs ago)*(1+r_average)^n = (price today)

i.e. it is calculated such that returns of r_average over n years would have taken the price n years ago to the price today if there were no variation of returns. this means that the scenario in your edit would involve someone who just plugs in the numbers AND who means it ... otherwise, the numbers would be worthless.
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