Which of the Following Statements Regarding the Arithmetic Mean and the Geometric

question 37

Multiple Choice

Which of the following statements regarding the arithmetic mean and the geometric mean is true?

• A) The arithmetic mean is always a better measure of average performance.
• B) The geometric mean is always a better measure of average performance.
• C) The arithmetic mean is a better measure of performance over single periods.
• D) The geometric mean is the best estimate of the expected return for the next period.

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Definitions:

Original Investment

The initial amount of money put into a project, asset, or venture.

Sales And Leaseback Arrangement

A financial transaction where one sells an asset and leases it back for the long-term; thus, one continues to use the asset but no longer owns it.

Operating Lease

A lease agreement allowing the use of an asset without ownership, typically with shorter terms than a finance lease.

Asset-Based Loan

An asset-based loan is a type of lending, often secured by a company's assets, where the loan amount is based on a percentage of the value of those assets.