- Explain the differences between the arithmetic return and the geometric return. Include in your explanation what factor determines the difference between arithmetic returns and geometric (compounded) returns. (75â€“150 words, or 1â€“2 paragraphs)
- If you own a stock with volatile returns over a 2-year period, will the average return be higher or lower than the geometric return? Explain why. (75â€“150 words, or 1â€“2 paragraphs)
- Why is it more convenient to display your investment returns in percentage terms rather than dollar terms? (75â€“150 words, or 1â€“2 paragraphs)
- Would a common stock or a corporate bond demand a higher risk premium? Explain why. (75â€“150 words, or 1â€“2 paragraphs)
- What are the differences between a bond risk premium and an equity risk premium? (75â€“150 words, or 1â€“2 paragraphs)
- Explain whether it is possible to earn excess returns without taking on additional risk. (75â€“150 words, or 1â€“2 paragraphs)
Note: For each prompt, be sure to reference at least one scholarly source to support your answer. Use the Walden Undergraduate Paper Template, provided in this weekâ€™s Learning Resources, to complete this Assignment.