• 2022-06-07
    When analyzing investment returns, which of the following statements is correct?
    A: The geometric mean will exceed the arithmetic mean for a series with non-zero variance.
    B: The geometric mean measures an investment’s compound rate of growth over multiple periods.
    C: The arithmetic mean accurately estimates an investment’s terminal value over multiple periods.
  • B

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    • 0

      Which of the following statements about return objectives is TRUE A: To achieve the capital appreciation objective, the nominal rate of return must exceed the rate of inflation. B: The total return objective considers returns from both capital gains and current income, net of expected inflation. C: The current income objective is usually appropriate when an investor requires the purchasing power of the initial investment to increase over time.

    • 1

      The average (arithmetic mean) of five number is 26. After one of the numbers is removed, the average (arithmetic mean) of the remaining numbers is 25. What number has been removed ?() A: 20 B: 25 C: 26 D: 30 E: 32

    • 2

      With regard to stock market indexes, it is least likely that:() A: the use of a geometric mean produces a downward bias on an equal-weighted index compared to the use of an arithmetic mean. B: the use of price weighting versus market value weighting produces a downward bias on the index. C: a value-weighted index must be adjusted for stock splits but not for dividends.

    • 3

      Which of the following is not a measure of central location? A: mean B: median C: variance D: mode

    • 4

      You are offered an investment opportunity. Its outcomes and probabilities are presented in the following table. X P(X) –$1000 .40 $0 .20 +$1000 .40 The mean of this distribution is _____________.