Suppose You Own Two Stocks, a and B in Year

question 75

Multiple Choice

Suppose you own two stocks, A and B In year 1, stock A earns a 2% return and stock B earns a 9% return. In year 2, stock A earns an 18% return and stock B earns an 11% return. Which stock has the higher geometric average return?

• A) Stock A
• B) Stock B
• C) The two stocks have the same geometric average return.
• D) At least three periods are needed to calculate the geometric average return.

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Definitions:

Standard Costs

Predetermined costs for products, materials, labor, and overhead, used as benchmarks for assessing actual production costs.

Controlling Costs

The practice of monitoring and managing expenses to keep them within budget and optimize financial performance.

Product Costing

The process of determining the total cost involved in manufacturing a product, including materials, labor, and overhead costs.

Theoretical Standards

Optimally set benchmarks based on perfect conditions for performance and efficiency.