When analyzing an investment that has continuously increased in value using annualized return.

a) the holding period return will be greater than the annualized return if the investment is held for less than one year.

b) the holding period return will equal the annualized return if the investment is held for one year.

c) the holding period return will be less than the annualized return if the investment is held for more than one year.

d) the holding period return and annualized return will always be identical.

Question

Business

Rayne Calhoun

22 July, 02:25

When analyzing an investment that has continuously increased in value using annualized return.

a) the holding period return will be greater than the annualized return if the investment is held for less than one year.

b) the holding period return will equal the annualized return if the investment is held for one year.

c) the holding period return will be less than the annualized return if the investment is held for more than one year.

d) the holding period return and annualized return will always be identical.

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Answers (1)

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Danna Wiggins · Answer 1

d) the holding period return and annualized return will always be identical.

Explanation:

Holding period return measures the return which accrue due to holding of securities or any asset for a given period of time and annualized return is the rate of return which we get due to the asset after annualizing it on yearly basis. For a security having fluctuating market price these two differ but for a security that has continuously increased in value, both are always identical.