You have calculated the historical dollar-weighted return, annual geometric average return, and annual arithmetic average return. You always reinvest your dividends and interest earned on the portfolio. Which method provides the best measure of the actual overall average historical performance of the investments you have chosen? Which method provides the best measure of your individual portfolio performance?

Multiple Choice

• Dollar-weighted return; geometric average return

• Geometric average return; dollar-weighted return

• Arithmetic average return; dollar-weighted return

• Arithmetic average return; geometric average return