The geometric mean of a series of returns is always larger than the arithmetic mean, and the difference increases with the volatility of the series.

Name: The geometric mean of a series of returns is always larger than the arithmetic mean, and the difference increases with the volatility of the series.
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Question

Quizplus · Accepted Answer

The statement is false. In fact, the geometric mean is generally smaller than the arithmetic mean, especially in volatile series, because it takes into account the compounding effect of returns.

The Geometric Mean of a Series of Returns Is Always