The Geometric Return on a Stock Over the Past 10

question 72

Multiple Choice

The geometric return on a stock over the past 10 years was 7.9 percent.The arithmetic return over the same period was 8.8 percent.What is the best estimate of the average return on this stock over the next 5 years?

• A) 8.40 percent
• B) 9.05 percent
• C) 9.08 percent
• D) 9.13 percent
• E) 9.47 percent

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Definitions:

White Knights

Third-party entities that come to the rescue of a company facing a hostile takeover by making a more favorable offer.

Takeovers

The acquisition of one company by another, which can be achieved through purchasing a controlling interest in the target company's stock.

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Satellite Radio

A subscription-based radio service that broadcasts directly from satellites, offering a wide range of channels and programming unavailable on traditional AM/FM radio.