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Suppose you have 10 years of historical data, from which you calculate an arithmetic average return of 8.54% and a geometric average return of 8.21%.

Suppose you have 10 years of historical data, from which you calculate an arithmetic average return of 8.54% and a geometric average return of 8.21%. Using Blume's formula, what is your 2-year average forecast?

a. 8.503%

b. 8.246%

c. 7.765%

d. 8.511%

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