Louis Owns a Stock That Has an Average Geometric Return

question 22

Multiple Choice

Louis owns a stock that has an average geometric return of 10.50 percent and an average arithmetic return of 11.00 percent over the past six years.What average annual rate of return should Louis expect to earn over the next four years?

• A) 10.38 percent
• B) 10.40 percent
• C) 10.64 percent
• D) 10.70 percent
• E) 10.81 percent

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Definitions:

First Processing Department

The initial stage or department in a manufacturing process where raw materials start their transformation into finished products.

Total Cost

The aggregate of all costs associated with producing or acquiring goods and services, including variable and fixed costs.

Direct Method

A method of reporting cash flows from operating activities in the statement of cash flows that lists major classes of gross cash receipts and payments.

Surgery Department

A specialized division within a hospital where surgical procedures are carried out.