Lisa Owns a Stock That Has an Average Geometric Return

question 42

Multiple Choice

Lisa owns a stock that has an average geometric return of 11.34 percent and an average arithmetic return of 11.51 percent over the past six years.What average annual rate of return should Lisa expect to earn over the next four years?

• A)11.38 percent
• B)11.41 percent
• C)11.44 percent
• D)11.47 percent
• E)11.51 percent

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Definitions:

Cost Center

A department or segment of a business that does not directly generate revenue but incurs costs, focusing instead on controlling expenses.

Cost Center

A department or unit within an organization that does not directly add to profit but still incurs costs, like HR or customer service departments.

Gross Profit

Income from sales or services minus the cost of goods sold; it measures how efficiently a company uses labor and supplies in production.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor, used to determine gross profit.