Which of the Following Statements Is FALSE

question 45

Multiple Choice

Which of the following statements is FALSE?

• A) The geometric average return is a better description of the long-run historical performance of an investment.
• B) The geometric average return will always be above the arithmetic average return, and the difference grows with the volatility of the annual returns.
• C) The compounded geometric average return is most often used for comparative purposes.
• D) 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.

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Definitions:

Psychological Dependence

A condition characterized by a perceived need to continue using a substance due to emotional or psychological reliance, despite potential harm.

Medications

substances used in the treatment, diagnosis, or prevention of diseases and for relieving pain or affecting the structure of any part of the body.

Attention Narrowing

The phenomenon where focus is restricted to a limited range of stimuli or tasks, ignoring peripheral information.

Stimulants

Drugs that have activating or excitatory effects on brain or bodily functions.