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:

Commercial Aircraft

Airplanes designed specifically for carrying passengers and/or cargo for commercial airlines.

Ready-Mix Concrete

Concrete that is manufactured in a factory or batching plant, according to a set recipe, and then delivered to a worksite by truck mounted in–transit mixers.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered by current or future actions.

Cost Curves

Graphical representations that show the cost of production as a function of total quantity produced.