Over the Past 4 Years, a Common Stock Has Had

question 99

Multiple Choice

Over the past 4 years, a common stock has had the following rates of return: 3.5%, 10.6%, -5.5% and8.6%. The geometric mean rate of return (rounded to one decimal) over these 4 years is

• A) 5.6%
• B) 6.4%
• C) 4.1%
• D) 4.7%

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Definitions:

Direct Method

A cash flow statement preparation approach where actual cash flow information from the company's operations is used, as opposed to indirect methods which adjust net income.

Sales Adjusted

The revised value of sales after accounting for returns, allowances, and discounts.

Cash Basis

A financial recording technique that acknowledges income and expenditures solely upon the actual exchange of cash.

Balance Sheet Accounts

Accounts displayed on the balance sheet that represent the company's assets, liabilities, and equity at a point in time.