Suppose a Particular Investment Earns an Arithmetic Return of 10

question 45

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 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) It cannot be determind from the information given.

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Definitions:

Freight Charges

Fees associated with the transportation of goods, typically paid by the shipper or receiver of the goods.

Industrial Paper Products

Products made from paper and used in various industries, such as packaging materials, filters, and workplace supplies.

Bonus

An additional compensation given to employees as an incentive or reward beyond their normal salary.

Commission

A payment to a salesperson for achieving a sale, often calculated as a percentage of the sale price.