- CFA Exams
- CFA Exam: Level I 2021
- Study Session 18. Portfolio Management (1)
- Reading 52. Portfolio Risk and Return: Part I
- Subject 1. Major Return Measures
CFA Practice Question
Which return measure reflects a buy-and-hold strategy?
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.
User Contributed Comments 4
| User | Comment |
|---|---|
| czar | please could someone help explain this one |
| Jamberto | didnt really get what they are asking... explanation would help |
| johntan1979 | The keywords are given in the explanation: investment amount not reset at the beginning of the year. Because of the compounding effect, you will want to make use of the buy-and-hold strategy. |
| khalifa92 | Holding period return: buy hold sell then find return Geometric: multiplies returns which implies haven't been sold yet |