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1. If you own a stock with volatile returns over a 2-year period, will the average return be higher or lower than the geometric return
1. If you own a stock with volatile returns over a 2-year period, will the average return be higher or lower than the geometric return? Explain why.
2. Explain the following statement: Playing the stock market is like gambling. Such speculative investing has no social value, other than the pleasure people get from this form of gambling.
3. Why is it more convenient to display your investment returns in percentage terms rather than dollar terms?
4. Would a common stock or a corporate bond demand a higher risk premium? Explain why.
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