Your grandfather invested $1,000 in a stock 31 years ago. currently the value of his account is $319,000. what is his geometric return over this period?
Holding period return that is HPR = (FV / PV)^1/N - 1 where
FV is future value of $319000
PV is present value of $1,000
N is 45 years
and subtract 1
(319000 / 1,000)^(1/31) - 1 is 13.38%
Therefore, grandfather's geometric return is 10.29% if he invested 31 years ago.
