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When you are evaluating the performance of an investment that has been held for several...

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Finance

When you are evaluating the performance of an investment that has been held for several years, what type of average rate of return(arithmetic or geometric) should you use? Why?(Select the best choice below.)
A.
The geometric rate of return should be used. It better describes the average annual rate of return over a period because it compounds at the same rate while the arithmetic rate of return is best used for a single period.
B.
The arithmetic rate of return should be used. It better describes the average annual rate of return over a period because it compounds at the same rate while the geometric rate of return is best used for a single period.
C.
Geometric average return better describes the average annual rate of return over a period because it is a simple average, so it answers the question concerning the expected rate of return over a period.
D.
Arithmetic average return better describes the average annual rate of return over a period because it is a simple average, so it answers the question concerning the expected rate of return over a period.

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