A measure of the performance of investments on a common-size basis which eliminates the distortion caused by the size of the initial investment is referred to as:
A)rate of return
B)risk premium ratio
C)return of capital
D)rate of inflation

Question

Quizplus · Accepted Answer

Rate of return on a common-size basis is a useful metric to compare the returns of different investments accurately, eliminating the effect of the initial investment size. It is calculated by dividing the total return by the initial investment and expressing the result as a percentage. This metric is commonly used by investors to evaluate the profitability of their investments and guide future investment decisions.

A Measure of the Performance of Investments on a Common-Size