Which One of the Following Best Defines the Variance of an Investment's

question 49

Multiple Choice

Which one of the following best defines the variance of an investment's annual returns over a number of years?

• A) The average squared difference between the arithmetic and the geometric average annual returns
• B) The squared summation of the differences between the actual returns and the average geometric return
• C) The average difference between the annual returns and the average return for the period
• D) The difference between the arithmetic average and the geometric average return for the period
• E) The average squared difference between the actual returns and the arithmetic average return

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Definitions:

Industry Leaders

Companies that dominate their market sectors, often characterized by high market share, innovation, and reputation.

Business Managers

Individuals who plan, direct, and oversee the operations and fiscal health of a business unit, division, department, or an entire company.

Financial Ratios

Financial ratios are quantitative measures derived from financial statement analysis to evaluate a company's financial health, performance, and viability.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, typically comprising the balance sheet, income statement, and cash flow statement.