Question

The mean return computed by finding the equivalent return that is compounded for N periods is_______?

Multiple Choice
a. dollar return
b. geometric returns
c. average return
d. percentage return

Answer 1

The mean return compounded for N periods is known as geometric returns, which reflects the compounded growth rate of an investment over time.

Step-by-step explanation:

The mean return computed by finding the equivalent return that is compounded for N periods is the geometric return. This type of return calculation is useful for comparing investment performance over time because it accounts for the compounding effect of returns. Unlike simple arithmetic returns that might only average different periodic returns, geometric returns give a more accurate picture of an investment's compounded growth rate over multiple periods.