Suppose You Own Two Stocks, a and B

question 47

Multiple Choice

Suppose you own two stocks, A and B. In year 1, stock A earns a 2% return and stock B earns a 9% return. In year 2, stock A earns an 18% return and stock B earns an 11% return. Which stock has the higher geometric average return?

• A) Stock A
• B) Stock B
• C) The two stocks have the same geometric average return.
• D) At least three periods are needed to calculate the geometric average return.

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Definitions:

2,3-Dimethylbutane

A branched alkane with the formula C6H14, notable for its use as a standard in octane rating tests and its presence in various fuels.

Ring Strain

The destabilization that occurs in a cyclic molecule due to the geometric or electronic constraints of the ring system.

Cyclooctane

A cyclic hydrocarbon with the formula C8H16, featuring an eight-carbon ring, known for its conformational flexibility and role in studying ring strain.

Cyclopropane

A cyclic alkane consisting of three carbon atoms connected in a ring, notable for its strain and use in organic synthesis.