Learning Module 1: Returns of Financial Assets and Instruments
When evaluating investment returns, which statement is accurate?
A The geometric mean is higher than the arithmetic mean when there’s variability in returns.
B The geometric mean calculates the compound growth rate of an investment across several periods.
C The arithmetic mean calculates the final value of an investment across multiple periods.
解析：
The correct answer is B. The geometric mean calculates the compound growth rate of an investment across several periods. The geometric mean takes into account the compounding effect of returns over time, providing a more accurate reflection of an investment’s average growth rate over multiple periods.
Answer A is incorrect: It is the arithmetic mean that tends to be higher than the geometric mean in the presence of return variability, not the other way around.
Answer C is incorrect: The arithmetic mean is used to calculate the average return per period, not the investment’s terminal or final value over multiple periods.
