The Geometric Average Return of 8,12,2,and 16 Per Cent Is $\times$

question 14

Multiple Choice

The geometric average return of 8,12,2,and 16 per cent is computed as:

• A)(1.08 + 1.12 + 1.02 + 1.16)^1/2 - 1
• B)(1.08 + 1.12 + 1.02 + 1.16)^1/4
• C)(1.08 \(\times\) 1.12 \(\times\) 1.0 \(\times\) 1.16) \(\times\) 4 - 1
• D)(1.08 + 1.12 + 1.02 + 1.16) \(\times\) 1/2
• E)(1.08 \(\times\) 1.12 \(\times\) 1.02 \(\times\) 1.16)^1/4 - 1

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Definitions:

Operating Losses

Losses incurred from a company's everyday operational activities not offset by revenue.

Synergistic Benefits

The additional value created by combining two or more companies or assets, which is above what individual entities can generate on their own.

Merger

The combination of two or more companies into a single entity, often to achieve synergies or scale efficiencies.

Divest

The process of selling an asset or business division.