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:

Primacy Effect

The tendency to remember information at the beginning of a list better than information in the middle or at the end.

Impression Management

The process of consciously making efforts to control and shape the perceptions others hold about an individual or organization.

Ingratiating Manner

A behavior or approach designed to win approval or favor from others through flattery or charm.

Business Executives

Individuals who hold senior positions within a company, responsible for strategic decision-making and overall organizational leadership.