Which of the following statements regarding the arithmetic mean and the geometric mean is true?
A) The arithmetic mean is always a better measure of average performance.
B) The geometric mean is always a better measure of average performance.
C) The arithmetic mean is a better measure of performance over single periods.
D) The geometric mean is the best estimate of the expected return for the next period.

Question

Quizplus · Accepted Answer

The arithmetic mean is typically used for single-period returns, while the geometric mean is better for multi-period returns as it accounts for compounding.

Which of the Following Statements Regarding the Arithmetic Mean and the Geometric