Louis Owns a Stock That Has Had an Average Geometric

question 1

Multiple Choice

Louis owns a stock that has had an average geometric return of 10.50 percent and an average arithmetic return of 11.00 percent over the past six years. What average annual rate of return should Louis expect to earn over the next four years?

• A)10.38%
• B)10.40%
• C)10.64%
• D)10.70%
• E)10.81%

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Definitions:

Specialty Product

A product that is characterized by its unique attributes, high level of quality, or brand identity, often leading consumers to put forth a significant effort in purchasing it.

Supplies

Materials or items used in the operation of a business or needed to provide services.

Unsought Product

Products that consumers do not actively seek out to buy, and may purchase only out of necessity or unforeseen need, such as emergency services or life insurance.

Shopping Products

Goods for which consumers will spend time and effort to compare quality, price, and perhaps style between different sellers before making a purchase.