- 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

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**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.

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**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 |