- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 1. Rates and Returns
- Subject 2. Rates of Return
CFA Practice Question
Which of the following is most likely correct?
A. If the geometric mean is negative, the arithmetic mean must also be negative.
B. The geometric mean return is a more appropriate measure of return than the arithmetic mean return.
C. If the arithmetic mean return is positive, it is implied that the return over the entire period is positive.
Explanation: Counter example for the two incorrect statements: return of -90%, +50%, +50% gives a total return of -77.5%
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