CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

Which return measure reflects a buy-and-hold strategy?

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
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