When the total return on an investment is expressed on a per-year basis it is called the:
A)capital gains yield.
B)dividend yield.
C)holding period return.
D)effective annual return.
E)initial return.

Question

Quizplus · Accepted Answer

The effective annual return is the return on investment expressed on a per-year basis, taking into account the effect of compounding. This measure is useful for comparing investments with different compounding periods or for evaluating the true annual return on an investment. The other options (capital gains yield, dividend yield, holding period return, and initial return) are all different ways of measuring returns on investments but do not necessarily take into account the effect of compounding.

When the Total Return on an Investment Is Expressed on a Per-Year