Because the simple arithmetic return does not consider compounding,its value will always be less than the geometric average return,unless the annual rates of return are constant.

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The simple arithmetic return does not account for compounding, but it can be higher or equal to the geometric average return, depending on the volatility and sequence of returns. The geometric return is always less than or equal to the arithmetic return unless all returns are equal, in which case they are the same.

Because the Simple Arithmetic Return Does Not Consider Compounding,its Value