Reading 7: Statistical Concepts and Market Returns-LOS l 习题 2011, investment, produced, returns, recent

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Session 2: Quantitative Methods: Basic Concepts
Reading 7: Statistical Concepts and Market Returns

LOS l: Discuss the use of arithmetic mean or geometric mean when determining investment returns.

 

 

In the most recent four years, an investment has produced annual returns of 4%, –1%, 6%, and 3%. The most appropriate estimate of the next year’s return, based on these historical returns, is the:

A) geometric mean.

B) harmonic mean.

C) arithmetic mean.

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Given a series of historical returns, the arithmetic mean is statistically the best estimator of the next year’s return. For estimating a compound return over more than one year, the geometric mean of the historical returns is the most appropriate estimator.

timi展望

In the most recent four years, an investment has produced annual returns of 4%, –1%, 6%, and 3%. The most appropriate estimate of the next year’s return, based on these historical returns, is the:

A) geometric mean.

B) harmonic mean.

C) arithmetic mean.

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