You Have Owned a Stock for Seven Years

question 48

Multiple Choice

You have owned a stock for seven years. The geometric average return on this investment for those seven years is positive even though the annual rates of return have varied significantly. Given this, you know the arithmetic average return for the period is:

• A)positive but less than the geometric average return.
• B)less than the geometric return and could be negative, zero, or positive.
• C)equal to the geometric average return.
• D)either equal to or greater than the geometric average return.
• E)greater than the geometric average return.

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