Which of the Following Statements Is TRUE

question 42

Multiple Choice

Which of the following statements is TRUE?

• A)The geometric mean measures the average annual rates of return while the arithmetic mean measures the compound growth rate over multiple time periods.
• B)The more the returns vary, the bigger the difference between the arithmetic and geometric mean will be.The difference is dependent on the relevant investment horizon.
• C)The geometric mean is appropriate when we are trying to estimate the typical return for a given period.
• D)The arithmetic mean is a better average return estimate when we are interested in the rate of return performance of an investment over time.

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