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 in Year