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:

Numerical Composition

Numerical composition refers to the representation or breakdown of components in a sample or group by their numbers, often used in statistical analysis.

Sampling Error

The discrepancy between the statistics calculated from a sample and the corresponding values in the entire population.

Confidence Interval

A confidence interval is a range of values, derived from statistical analysis, that is likely to contain the true value of an unknown population parameter.

Census Limits

The constraints or limitations inherent in conducting a census, such as time, cost, and accuracy of data collection.