The Geometric Return on an Investment Is Approximately Equal to the Arithmetic

question 31

Multiple Choice

The geometric return on an investment is approximately equal to the arithmetic return:

• A)plus half the standard deviation.
• B)plus half the variance.
• C)minus half the standard deviation.
• D)minus half the variance.
• E)divided by two.

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Definitions:

Price Elasticity of Supply

The measure of how the supply quantity of a product is affected by changes in its price is known as the price elasticity of supply.

Time Horizon

Describes the length of time over which an investment, project, or policy is evaluated or expected to have an impact.

Income Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in consumers' income, holding all else constant.

Midpoint Method

A technique used in economics to calculate the percentage change between two points by dividing the change by the average of the initial and final values.