Question
The geometric mean of a series of returns is always larger than the arithmetic mean, and the difference increases with the volatility of the series
The geometric mean of a series of returns is always larger than the arithmetic mean, and the difference increases with the volatility of the series
True
False
Assume that during the past year the consumer price index increased by 1.5 percent and the securities listed below returned the following nominal rates of return.
U.S. Government T-bills | 2.75% |
U.S. Long-term bonds | 4.75% |
What are the real rates of return for each of these securities? [formula: RRFR= ((1+ NRFR)/(1+ Rate of Inflation))-1
4.29% and 6.32% | |||
1.23% and 4.29% | |||
| |||
1.23% and 3.20% | |||
3.75% and 5.75% |
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