Suppose You Own Two Stocks, a and B

question 14

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.__________ has the higher arithmetic average return.

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

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Definitions:

Forged

Created, altered, or imitated with the intent to deceive; typically refers to documents, signatures, or art.

Negligence

The failure to take reasonable care to avoid causing injury or loss to another person, resulting in legal liability for the damages caused.

Stored-Value Card

A plastic card that contains data regarding the value of the card, thereby allowing EFTs to be made.

Magnetic Strip

A strip of magnetic material on a credit card or other card containing data that can be read by swiping it through a reader.