CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

A portfolio has two securities with 35% and 65% allocations by market value. The first security has a return of 8% and the second security has a return of 14%. What is the unweighted, geometrically average return for the portfolio?
A. 10.96%
B. 11.00%
C. 11.90%
Explanation: [(1 + .08) x (1 + .14)]1/2 - 1 = 10.96%

User Contributed Comments 10

User Comment
Bibhu unweighted is the important point here.
Shelton a little less than 11% => B
seemor How do I find 1/2 on my BA11 plus
agnesemi use yx 0.5
whoi or, extract the root...
Inf11B 1/2 power is the same as the square root. I missed the "unweighted" too.
threedot what is it was weighted?
Bill12345 geometric is always less than average.
farhan92 my niece ran away with my calculator...be prepared for this to happen in the exam
bmahoney1 why would you even want to measure geometric return for two securities in ONE time period?... The answer is, you wouldn't.
You need to log in first to add your comment.