Returns of Financial Assets and Instruments
Free CFA Level I lesson in Quantitative Methods. 11 min read, ~1,609 words.
Holding period return (HPR) = (Ending + Income) / Beginning − 1. Compound HPRs to chain multi-period returns. Geometric mean ≤ arithmetic mean. Geometric measures realized compound growth; arithmetic measures expected single-period return. Money-weighted return = IRR (sensitive to cash flow timing). Time-weighted return = compounded HPRs (manager-agnostic to flows)...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- returns of financial assets and instruments
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