The Geometric Average Return Will Always Be Above the Arithmetic

question 30

True/False

The geometric average return will always be above the arithmetic average return, and the difference grows with the volatility of the annual returns.

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Definitions:

Freight-In

Freight-in refers to the shipping cost associated with getting goods delivered from suppliers to the buyer, often included in the inventory cost of purchased goods.

Sales Returns

Goods returned by buyers after sale due to defects, dissatisfaction, or other reasons, which are deducted from total sales revenue.

Unearned Revenue

Money received by an entity for a service or product yet to be provided or delivered.

Periodic Inventory System

An inventory accounting system where updates are made to inventory levels and cost of goods sold at specific periods.