The difference between the arithmetic average return and the geometric average return is __________ for stocks with a high variance of returns,compared to stocks with a low variance of returns.

Question

Quizplus · Accepted Answer

The difference between the arithmetic average return and the geometric average return is higher for stocks with a high variance of returns because the geometric average accounts for compounding and is more affected by volatility.

The Difference Between the Arithmetic Average Return and the Geometric