When, If Ever, Will the Geometric Average Return Exceed the Arithmetic

question 85

Multiple Choice

When, if ever, will the geometric average return exceed the arithmetic average return for a given set of returns?

• A)When the set of returns includes only risk-free rates
• B)When the set of returns has a wide frequency distribution
• C)When the set of returns has a very narrow frequency distribution
• D)When all of the rates of return in the set of returns are equal to each other
• E)Never

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Definitions:

Manufacturing Overhead

Indirect factory-related costs that are incurred when a product is manufactured.

Selling

The process of persuading or influencing a customer to purchase a product or service.

Administrative Expenses

Costs related to the general operation of a business that are not directly linked to production or sales, such as salaries of office staff and utilities.

Cash Disbursements

The payments a company makes during a period, including expenses, debt payments, and purchase of assets.