Suppose a Particular Investment Earns an Arithmetic Return of 10

question 20

Multiple Choice

Suppose a particular investment earns an arithmetic return of 10% in year 1, 20% in year 2 and 30% in year 3.The geometric average return for the year period will be

• A)greater than the arithmetic average return.
• B)equal to the arithmetic average return.
• C)less than the arithmetic average return.
• D)equal to the market return.
• E)Cannot tell from the information given

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Definitions:

Oligopoly Market

A market structure characterized by a small number of firms that dominate the market, leading to competitive yet interdependent market conditions.

Monopolistically Competitive Market

An economic scenario where numerous companies offer products that are alike but not exactly the same, leading to competition based on aspects other than price.

Monopolistic Market

An economic scenario where only one seller provides a distinctive product or service, facing substantial obstacles that prevent other competitors from entering the market.

Purely Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and products that are perfect substitutes.