Geometric mean return is a better estimate of long-run investment performance than the arithmetic mean.

Name: Geometric mean return is a better estimate of long-run investment performance than the arithmetic mean.
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Quizplus · Accepted Answer

The geometric mean takes into account the compounding effect of investment returns over time, providing a more accurate measure of long-term performance compared to the arithmetic mean, which does not account for the impact of volatility and compounding.

Geometric Mean Return Is a Better Estimate of Long-Run Investment