Answer: The correct answer is the Geometric average return
Explanation:
A geometric average return calculates the average rate of return that is compounded over multiple periods of time. The common formula for a GAR is (1+r1) * (1+r2) *...(1+rn)) 1/n −1.
The average compound return earned per year over a multi-year period is called the Geometric Average Return.
The geometric average return is the typical rate of return on an investment kept over a length of time in which any revenue is accumulated. In other words, the geometric average return takes into account how investments grow over time.
Since it takes into consideration the order of returns and the resulting compounding impact, the geometric average return is a more accurate indicator of average return than the arithmetic average return. Where returns are unpredictable, the arithmetic average return overstates an investment's effectiveness. The geometric average return is the recommended metric whenever comparing returns over long time periods.
To know more about Geometric Average, visit:
https://brainly.com/question/28562900
