When, if ever, will the geometric average return equal the arithmetic average return for a given set
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Question:
When, if ever, will the geometric average return equal the arithmetic average return for a given set of returns?
Hint: The geometric mean differs from the arithmetic mean in how it's calculated because it takes into account the compounding that occurs from period to period.
Choices:
1) | When the rate of return is constant |
2) | When the set of returns includes only risk-free rates. |
3) | When the set of returns has a very narrow frequency distribution. |
4) | When the set of returns has a wide frequency distribution. |
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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