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:

Unpaid Lien

A legal claim or right against a property due to unpaid debts, which must be paid off when the property is sold.

Fitness and Quality

Essential criteria that goods or services must meet, ensuring they are suitable and of a high standard for consumers.

Sale of Goods Act

Legislation governing the sale and purchase of goods, setting out legal rights and obligations of buyers and sellers.

Referral Selling

A sales strategy where existing customers are encouraged to refer new clients or customers to a business, often incentivized with rewards.