Leeanne Owns a Stock That Has an Average Geometric Return

question 38

Multiple Choice

Leeanne owns a stock that has an average geometric return of 12.30 percent and an average arithmetic return of 12.55 percent over the past six years. What average annual rate of return should Leeanne expect to earn over the next four years?

• A)12.38%
• B)12.40%
• C)12.44%
• D)12.47%
• E)12.51%

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Definitions:

Nation's Total Income

The total amount of money earned within a country from the production of goods and services, before taxes and other deductions.

Utility

A measure of satisfaction, usefulness or pleasure a consumer obtains from consuming a good or service.

Redistribution of Income

A policy or practice by which income is redistributed from wealthier segments of society to poorer ones through mechanisms like taxation and government spending.

Income Distribution

The way in which a nation’s total income is spread among its population, often analyzed to understand the extent of economic inequality.