Which of the following statements is (are)true?
A)The geometric average rate of return will always be greater than the arithmetic average rate of return.
B)The arithmetic average rate of return will always be greater than the geometric average rate of return.
C)The difference between the geometric and arithmetic average rate of returns will be greater, the greater the variability of the annual returns.
D)Both A and C are true statements.

Question

Quizplus · Accepted Answer

The geometric average rate of return is always less than or equal to the arithmetic average rate of return, with the difference being greater when there is more variability in the annual returns.

Which of the Following Statements Is (Are)true