Assignment:
An investment in the "techstar" has been highly volatile over the past four years. An initial investment of $10,000 increased to $25,000 at the end of the 1styear, increased to $35,000 by the end of the 2nd year, fell to $5,000 at the end of the 3rdyear, and recovered to $10,000 by the end of the 4thyear.
Calculate the arithmetic and geometric returns over the last four years.
Which measure of performance is more appropriate to use when analyzing past performance? Why?