“…using the sample geometric mean does not introduce bias in the calculated terminal value of an investment.”
can someone explain to me why?
also…
“however, with an inverted yield curve,the st yields exceed lt yields n the required return estimate based on using a risk free rate based on a bill can be much higher.”
Rsk premium = Ri - Rf
if the st yields > lt yields, then risk premium using bill is lower because Of the higher Rf, hence the required return should also be lower?