If Returns on Stock a Are More Volatile Than the Returns

question 59

Multiple Choice

If returns on stock A are more volatile than the returns on stock B, the geometric average return of stock A will be ________ the geometric average return of stock B when their arithmetic average returns are same.

• A) same as
• B) higher than
• C) lower than
• D) always same as

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Definitions:

Third-Degree Price Discrimination

A pricing strategy where different prices are charged to different customer groups based on their elasticity of demand.

First-Degree Price Discrimination

A pricing strategy where a seller charges the maximum price that each consumer is willing to pay, capturing the entire consumer surplus.

Monopolist

An entity or person that has exclusive control over the supply of a particular good or service in the market, potentially influencing prices and availability.

Greater Profits

Increased financial gains achieved by a business, indicating higher revenue over costs compared to a previous period or benchmark.