The geometric average rate of return is based on
A) the market's volatility.
B) the concept of expected return.
C) the standard deviation of returns.
D) the CAPM.
E) the principle of compounding.

Question

Quizplus · Accepted Answer

The geometric average rate of return is based on the principle of compounding, as it takes into account the effect of earning interest on interest, which is a key aspect of compounding returns over time.

The Geometric Average Rate of Return Is Based on