The average compound return earned per year over a multiyear period is called the ________ average return.
A)real
B)standard
C)arithmetic
D)variant
E)geometric

Question

Quizplus · Accepted Answer

The average compound return earned per year over a multiyear period is referred to as the geometric average return. This measure of return considers the effect of compounding on investment returns, making it the most representative measure of an investment's historical performance. Arithmetic average return is also a measure of return, but it does not take compounding into account and can be misleading, particularly for long-term investments. Real and standard average returns are not widely used measures of return. Variant average return is not a financial or statistical term.

The Average Compound Return Earned Per Year Over a Multiyear