Over the Past 10 Years, a Small-Cap Fund and a Large-Cap

Multiple Choice

Over the past 10 years, a small-cap fund and a large-cap fund each reported an arithmetic mean return of 7%. Based on this information, the geometric mean return for the small-cap fund was most likely:

A) less than 7% and exceeded the geometric mean return of the large-cap fund.
B) less than 7% and was less than the geometric mean return of the large-cap fund.
C) more than 7% and exceeded the geometric mean return of the large-cap fund.
D) more than 7% and was less than the geometric mean return of the large-cap fund.