When forecasting the future,the arithmetic average historical return is probably too ____ of an estimate for longer periods and the geometric average historical return is:

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Quizplus · Accepted Answer

The arithmetic average historical return is probably too high of an estimate for longer periods because it does not take into account the compounding effect of returns. The geometric average historical return is probably too low because it does not take into account the volatility of returns.

When Forecasting the Future,the Arithmetic Average Historical Return Is Probably