Is the average rate of return on an investment a good representation of the long-run rate...
Is the average rate of return on an investment a good representation of the long-run rate of return that a buy-and-hold investor receives? Is it possible to lose all your money on a buy-and-hold portfolio that had a positive average rate of return?
Homework Answers
No Average rate of return does not indicate the deviations or the risk involved in investment.
Yes it is possible to lose all money even if the portfolio had positive average return if the risk or standard deviation is high . If risk is high in a certain year the average - standard deviation could be negative leading to loss of investments
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Is the average rate of return on an investment a good
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