### CFA Practice Question

There are 536 practice questions for this topic.

### CFA Practice Question

If a security market index has a price return of 10% for period 1 and 15% for period 2, its price return for the 2 periods should be ______.

A. 12.5%
B. 25%
C. 26.5%

(1 + 10%) (1 + 15%) - 1 = 0.265

### User Contributed Comments10

User Comment
dipu617 How to do it in BAII plus?
michlam14 i used the formula for time weighted return ((1+.1) *(1+.15))to the power of 1/2 , then subtract 1 = 12.5% why am i wrong??
gulfa99 question is 2 period return not annualized return
gill15 Mich

What your doing is finding the semi annual period rate essentially (1 + j)^2 = (1.1)(1.15) and solving for j. Not right.
dmfz Just do it with \$1. 1st period dollar grows to \$1.10, 2nd period \$1.10 goes to \$1.265
TheProfet The words here are important. If its an annual return, you use the geometric average formula. If the return is periodic, then you simply take 1 +rate s, multiply them and subtract one.
CFAToad So you multiply instead of add because these are prices and reinvested income, correct?
chesschh has to be more than 25% since its reinvested
khalifa92 REMINDER
multiple periods for both price return and total return are calculated geometrically.
cosmos1994 Imagine you invest 1 into index at period