Volatility drag - i

Calculus Level 3

It seems that investments with a constant rate of return \(r_0\) end up with a different return than investments whose average rate of return is \(\langle r(t) \rangle = r_0\). Might fluctuations in the return rate dissipates potential gains, like friction dissipates kinetic energy in physics?

Which of the following explains what's going on?

×

Problem Loading...

Note Loading...

Set Loading...