Suppose You Own Two Stocks, a and B

question 47

Multiple Choice

Suppose you own two stocks, A and B. In year 1, stock A earns a 2% return and stock B earns a 9% return. In year 2, stock A earns an 18% return and stock B earns an 11% return. Which stock has the higher geometric average return?

• A) Stock A
• B) Stock B
• C) The two stocks have the same geometric average return.
• D) At least three periods are needed to calculate the geometric average return.

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Definitions:

Long-Term Memory

A type of memory capable of storing information for an extended period, ranging from hours to a lifetime.

Primary Memory

Another term for short-term memory, referring to the capacity for holding a small amount of information in mind in an active, readily available state.

Working Memory

A cognitive system responsible for temporarily holding information available for processing and problem-solving.

Eidetic Memory

The ability of an individual to recall images, sounds, or objects in memory with high precision for a few minutes without using mnemonics.