Investment Question?

Question

Can someone help me with this question:

The actual total returns (price change plus reinvested dividends) for the S&P 500 Index over 6 years have been:
1997 33.2%
1998 28.6%
1999 21.0%
2000 -9.1%
2001 -11.9
2002 -22.1%
How do you calculate the geometric (compound) and arithmetic average annual returns.

Answer 1

The geometric mean is:
(1.332 * 1.286 * 1.21 * 0.909 * 0.881 * 0.779)^(1/6) =
1.04376 so the geometric average (or mean) is 4.38%

The arithmetic mean is:
(33.2% + 28.6% + 21% - 9.1% - 11.9% - 22.1%)/6 =
6.617%
Note that in this case, as is usually true with investments that the arithmetic mean (or average) is an incorrect measure due to the starting point for each percentage.

Hope this helps.

Answer 2

Uh, here is the max chart - hope it helps

http://finance.yahoo.com/q/bc?s=%5EGSPC&t=my&l=off&z=m&q=l&c=

97 looks like it was about 700 ?
and 02 looks like about 1300 ? ( about like today !)

maybe the actual historical price option on the left ?
good luck