Which of the following would be most useful as an estimate of the expected return for...

Which of the following would be most useful as an estimate of the expected return for an investment over the next year, if you believe that historical returns are a good indication of future returns?

Select one:

a. None of the responses are correct.

b. Geometric Average Realised Return

c. Arithmetic Average Realised Return

d. Both (i) Arithmetic Average Realised Return and (ii) Geometric Average Realised Return

Solutions

Expert Solution

Option B is correct
Geometric Average Realised Return would be most useful as an estimate of the expected return for an investment over the next year, if you believe that historical returns are a good indication of future returns

jeff jeffy answered 2 years ago

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