Estimates of the Rate of Return on a Security Based

question 91

Multiple Choice

Estimates of the rate of return on a security based on a historical arithmetic average will probably tend to _____ the expected return for the long-term and estimates using the historical geometric average will probably tend to _____ the expected return for the short-term.

• A)overestimate; overestimate
• B)overestimate; underestimate
• C)underestimate; overestimate
• D)underestimate; underestimate
• E)accurately; accurately

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Definitions:

Argument

A series of statements or reasons made to persuade others that an idea or point of view is correct or valid.

True

In accordance with fact or reality, without falsehood or error.

False

Not true; incorrect.

False Alternative

A logical fallacy that occurs when an argument presents a limited set of options as if they are the only possibilities when, in fact, more options exist.