Trina Romel, mutual fund manager, is taking over a poor-performing fund from a colleague. Romel wants to calculate the return on the portfolio. Over the last five years, the fund's annual percentage returns were: 25, 15, 12, -8, and -14. Determine if the geometric return of the fund will be less than or greater than the arithmetic return and calculate the fund's geometric return:
Geometric Return Geometric compared to Arithmetic
A) 4.96% greater than
B) 4.96% less than
C) 12.86% greater than
Answer: B