Which of the following is not correct about the Compound Annual Growth Rate (CAGR)?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → It is calculated by taking the arithmetic mean of series of returns.
The statement that is NOT correct about CAGR is:
It is calculated by taking the arithmetic mean of series of returns.
CAGR is calculated using the geometric growth rate, not the arithmetic mean.