Which One of the Following Averaging Methods Is the Preferred

question 81

Multiple Choice

Which one of the following averaging methods is the preferred method of constructing returns series for use in evaluating portfolio performance?

• A) Geometric average
• B) Arithmetic average
• C) Dollar-weighted
• D) Internal

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Definitions:

Cut-Throat Competition

Intense competition where competitors use aggressive tactics to undercut each other’s prices and gain market share.

Consumer Demand

The desire by consumers to purchase goods and services, quantified by the amount of a product people are willing to buy at certain price levels.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to a stable market condition.

Increasing-Cost Industry

An industry where production costs increase as the industry's output increases, often due to resource limitations or other scaling challenges.