The Geometric Average Rate of Return Is Based on

question 32

Multiple Choice

The geometric average rate of return is based on

• A) the market's volatility.
• B) the concept of expected return.
• C) the standard deviation of returns.
• D) the CAPM.
• E) the principle of compounding.

---

Definitions:

Real Rate

The interest rate adjusted for inflation, more accurately reflecting the true cost of borrowing or the real yield on an investment.

Prices Fall

A situation where the monetary value or cost of goods and services decreases over a period of time, often leading to increased consumer demand.

Perfect Substitutes

Goods that can be used in place of each other with no loss of utility to the consumer, often seen as identical in consumption.

Apples

Edible fruits from the apple tree, with a sweet taste and crisp texture, consumed worldwide and used in various cuisines for dishes such as pies, juices, and ciders.