A Stock Has Varying Annual Rates of Return Over a 10-Year

question 70

Multiple Choice

A stock has varying annual rates of return over a 10-year period and a positive geometric average return for the same period. Given this, you know the arithmetic return will be:

• A) Positive but less than the geometric average return
• B) Less than the geometric return and can be negative, zero or positive
• C) Equal to the geometric average return
• D) Either equal to or greater than the geometric average return
• E) Greater than the geometric average return