Suppose You Own Two Stocks, a and B in Year

question 63

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. __________ has the higher arithmetic average return

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

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