Suppose a Particular Investment Earns an Arithmetic Return of 10

question 28

Multiple Choice

Suppose a particular investment earns an arithmetic return of 10% in year 1,20% in year 2 and 30% in year 3.The geometric average return for the year period will be __________.

• A)greater than the arithmetic average return
• B)equal to the arithmetic average return
• C)less than the arithmetic average return
• D)equal to the market return
• E)cannot tell from the information given

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