Precious metals

From 2006-2009, the value of precious metals changed rapidly. The data in the following table represent the total rate of return (in percentage) for platinum, gold, and silver from 2006 through 2009: Year Platinum Gold Silver 2009 62.7 25.0 56.8 2008 -41.3 4.3 -26.9 2007 36.9 31.9 14.4 2006 15.9 23.2 46.1 a. Compute the geometric mean rate of return per year for platinum, gold, and silver from 2006 through 2009. b. What conclusions can you reach concerning the geometric mean rates of the three precious metals?

Correct answer:

r1 =  1.1095
r2 =  1.2065
r3 =  1.1765

Step-by-step explanation:

p1=100%+62.7%=1+10062.7=1.627 p2=100%+41.3%=1+10041.3=0.587 p3=100%+36.9%=1+10036.9=1.369 p4=100%+15.9%=1+10015.9=1.159  r1=4p1 p2 p3 p4=41.627 0.587 1.369 1.159=1.1095
g1=100%+25.0%=1+10025.0=1.25 g2=100%+4.3%=1+1004.3=1.043 g3=100%+31.9%=1+10031.9=1.319 g4=100%+23.2%=1+10023.2=1.232  r2=4g1 g2 g3 g4=41.25 1.043 1.319 1.232=1.2065
s1=100%+56.8%=1+10056.8=1.568 s2=100%+26.9%=1+10026.9=0.731 s3=100%+14.4%=1+10014.4=1.144 s4=100%+46.1%=1+10046.1=1.461  r3=4s1 s2 s3 s4=41.568 0.731 1.144 1.4611.1765  r1  r2  r3

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Showing 1 comment:
Dr Math
So all metals have approx the same rate of price growth per year over time

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