Which of the Following Statements Is FALSE

question 57

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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