What Are the Arithmetic and Geometric Average Returns for a Stock

question 41

Multiple Choice

What are the arithmetic and geometric average returns for a stock with annual returns of 14.9 percent,14.6 percent,−2.8 percent,and 9.7 percent?

• A)9.100%; 8.673%
• B)8.882%; 8.854%
• C)9.100%; 8.771%
• D)8.897%; 8.854%
• E)9.100%; 8.854%

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Definitions:

Y-intercept

The Y-intercept of a linear equation is the point where the line crosses the Y-axis on a graph, representing the value of the dependent variable when the independent variable is zero.

Correlation

A statistical measure that expresses the extent to which two variables change together, indicating the strength and direction of their relationship.

Criterion Variable

Another term for the dependent variable, emphasizing its role as the outcome variable that is predicted or explained in a study.

Regression

A statistical method used to estimate the relationships among variables, typically to forecast a dependent variable based on one or more independent variables.