Suppose a Portfolio Had an Arithmetic Average Return of 8

question 18

Multiple Choice

Suppose a portfolio had an arithmetic average return of 8 percent for a 4-year period.Which one of these statements must be true regarding this portfolio for the period?

• A)At least one of the four years produced an annual rate of return of 8 percent.
• B)If the standard deviation of the portfolio is greater than zero,then the geometric average portfolio return is less than 8 percent.
• C)The standard deviation of the portfolio must be lower than the standard deviation of a comparable portfolio that had an arithmetic average return of 9 percent.
• D)If the standard deviation of the portfolio is zero,then the geometric average return must also be zero.
• E)The holding period return must be less than 8 percent.

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Definitions:

Normally-Open

A contact configuration in switches or relays that is open (non-conducting) when at rest, closing only when activated.

Contactor

An electrically controlled switch used for switching an electrical power circuit, commonly used in motor control applications.

Start Pushbutton

A button that, when pressed, initiates the operation of a machine or device, commonly found in motor control circuits to start motors.

Control Circuit

An electrical circuit designed to control the operation of devices in a system, often through the use of relays, switches, and timers.