You have calculated the historical dollar weighted return, annual geometric average return and annual arithmetic average return. You always reinvest your dividends and interest earned on the portfolio. What method provides the best measure of the actual average historical performance of the investments you have chosen? 

 

Answer rating: 100% (QA)

The method that provides the best measure of the actual average historical performance of investments when dividends and interest are reinvested is the annual geometric average return The annual geometric average return takes into account the compounding effect of reinvesting dividends and interest earned on the portfolio It reflects the true growth rate of an investment ... View the full answer