If Returns on Security a Are More Volatile Than the Returns

question 70

Multiple Choice

If returns on security A are more volatile than the returns on security B, the geometric average return of security A is _ the geometric average return of security B when their arithmetic average return is the same.

• A) the same as
• B) lower than
• C) higher than
• D) cannot say for sure

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Definitions:

Price Level

A metric that represents the median of present prices for all types of goods and services in the economy.

Future Expectations

The anticipations or outlook that consumers and businesses have about economic conditions that affect their spending and investment decisions.

Deferring Consumption

The act of postponing spending money on consumption goods to save or invest for future use.

Interest

The cost of borrowing money, usually expressed as a percentage of the amount borrowed, paid over a specific period.