The Geometric Return on an Asset Over the Past 12

question 56

Multiple Choice

The geometric return on an asset over the past 12 years has been 14.50 percent.The arithmetic return over the same period was 14.96 percent.What is the best estimate of the average return on this asset over the next 5 years?

• A) 14.47 percent
• B) 14.67 percent
• C) 14.79 percent
• D) 14.88 percent
• E) 14.86 percent

---

Definitions:

Production Costs

The expenses incurred during the process of creating a good or service, including labor, materials, and overhead costs.

Business Monopoly

A market structure characterized by a single seller or firm dominating the entire market, often leading to less competition and higher prices.

Price Equal

A situation where the market price stabilizes, reaching a point where supply equals demand.

Marginal Cost

The extra financial burden of manufacturing one more unit of a product or service.