The ________ Measure of Returns Ignores Compounding

question 62

Multiple Choice

The ________ measure of returns ignores compounding.

• A) geometric average
• B) arithmetic average
• C) IRR
• D) dollar-weighted

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Definitions:

U.S. Dollar

The official currency of the United States, widely used as a standard of exchange in international markets and a reserve currency globally.

Foreign Exchange

The trade of one currency for another, facilitating international trade and investment.

Appreciate

To recognize the full worth of something or to increase in value over time.

Arbitrageur

An individual or entity that engages in arbitrage, which involves buying securities in one market at a lower price and selling them in another market at a higher price to profit from the price difference.