Which of the Following Statements Is False

question 66

Multiple Choice

Which of the following statements is false?

• A) The compounded geometric average return is most often used for comparative purposes.
• B) We should use the arithmetic average return when we are trying to estimate an investment's expected return over a future horizon based on its past performance.
• C) The geometric average return will always be above the arithmetic average return and the difference grows with the volatility of the annual returns.
• D) The geometric average return is a better description of the long-run historical performance of an investment.

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Definitions:

Responsibility Centre

A management accounting tool in which parts of an organization are allocated responsibility for controlling costs, revenues, or investments.

Control Purposes

Activities or measures implemented to ensure that operations are conducted as planned and resources are used efficiently.

Direct Material

Direct Material refers to the raw materials that are directly incorporated into a finished product and are a significant part of manufacturing costs.

Cost Per Equivalent Unit

A method used in process costing that calculates the cost assigned to goods based on the stage of completion.