- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 62. Portfolio Risk and Return: Part I
- Subject 1. Major Return Measures
CFA Practice Question
Which return measure accounts for the compounding of returns?
B. Geometric mean
C. Holding period return
A. Arithmetic mean
B. Geometric mean
C. Holding period return
Correct Answer: B
This measure assumes that the investment amount is not reset at the beginning of each year and accounts for the compounding of returns.
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