- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 3. Statistical Measures of Asset Returns
- Subject 1. Measures of Central Tendency

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**CFA Practice Question**

An analyst collects the following set of past stock returns: -2.3%, -5.1%, 7.6%, 8.2%, 9.1%, and 9.8%. Which of the following measures of return is most likely the highest?

A. Arithmetic mean return

B. Geometric mean return

C. Median return

**Explanation:**For this data, the median is (7.6% + 8.2%)/2 = 7.90%. The arithmetic mean is (-2.3% + -5.1% + 7.6% + 8.2% + 9.1% + 9.8%) /6 = 4.55%. The geometric mean return is ([1 + -2.3%]*[1 + -5.1%]*[1 + 7.6%]*[1 + 8.2%]*[1+9.1%]*[1+9.8%])1/6 - 1 = 4.38%.

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