A Stock Has an Arithmetic Average Return of 10

question 32

Multiple Choice

A stock has an arithmetic average return of 10.4% and a geometric average return of 8.8% based on the annual returns for the last 25 years. What is the best estimate of the annual return on this stock over the next 5 years?

• A) 11.04%
• B) 12.68%
• C) 13.01%
• D) 10.13%
• E) 12.87%

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