An annualized return: A)is less than a holding period return when the holding period is less than one year. B)is expressed as the summation of the capital gains yield and the dividend yield on an investment. C)is expressed as the capital gains yield that would have been realized if an investment had been held for a twelve-month period. D)is computed as (1 + holding period percentage return)^m, where "m" is the number of holding periods in a year. E)is computed as (1 + holding period percentage return)^m, where "m" is the number of months in the holding period.

Question

Quizplus · Accepted Answer

An annualized return converts the holding period return to an equivalent yearly return, assuming the investment is compounded over the year. The formula provided in option D, despite the typographical errors, suggests the correct method for annualizing a return, where "m" is the number of holding periods in a year, indicating the compounding effect over those periods to annualize the return.

An Annualized Return