Suppose you own two stocks, A and B.In year 1, stock A earns a 2% return and stock B earns a 9% return.In year 2, stock A earns an 18% return and stock B earns an 11% return.__________ has the higher arithmetic average return.
A)Stock A
B)Stock B
C)The two stocks have the same arithmetic average return.
D)At least three periods are needed to calculate the arithmetic average return.

Question

Quizplus · Accepted Answer

A: (2% + 18%)/2 = 10%; B: (9% + 11%)/2 = 10%.

Suppose You Own Two Stocks, a and B