The Difference Between the Arithmetic Average Return and the Geometric

question 43

Multiple Choice

The difference between the arithmetic average return and the geometric average return is __________ for stocks with a high variance of returns,compared to stocks with a low variance of returns.

• A) higher
• B) lower
• C) the same
• D) can be either higher or lower
• E) none of these

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Definitions:

Continuous Budgeting

A financial planning approach where a rolling budget for a future period is continuously updated.

Full Year Ahead

Refers to forecasting or planning activities for the next complete fiscal year.

Division Managers

Individuals responsible for overseeing the operations, profitability, and performance of a specific division within a larger company.

Department Heads

Leaders responsible for overseeing specific departments within an organization, ensuring their team meets the objectives and goals set by upper management.