Business, 13.03.2020 01:35 halimomohamed

Consider an investment with the following returns over four years:

Year 1 2 3 4

Return 15% 7% 9%11%

Which is a better measure of the investment's past performance? If the investment's returns are independent and identically distributed, which is a better measure of the investment's expected return next year?
Arithmetic average is a better measure of the investment's past performance while CAGR is a better measure of the investment's expected return next year.
CAGR is a better measure of the investment's past performance while arithmetic average is a better measure of the investment's expected return next year.

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Consider an investment with the following returns over four years:

Year 1 2 3 4

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