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:

Net Income

The amount of profit earned in a period after all expenses, taxes, and costs have been subtracted from total revenue.

Fixed Ratio

A financial metric that reflects the consistency of a company's financial performance by comparing various fixed costs to its total expenses.

Interest On Capital

The return on investment that is required or anticipated for the money or capital invested in a business or project.

Salary Allowances

Additional compensations over the base salary that may cover various specific needs or expenses.