holding period return Correct answer-(ending value-beginning value) /
beginning value OR
(Ending value / beginning value) - 1
, CFA Level 1: Quant; Questions and Answers
100% Solved
time-weighted rate of return Correct answer-The compound rate of
growth of one unit of currency invested in a portfolio during a stated
measurement period; a measure of investment performance that is not sensitive
to the timing and amount of withdrawals or additions to the portfolio. Also a
geometric mean return
money weighted return Correct answer-IRR based on cash inflows and
outflows
Bank discount yield Correct answer-RBD = D/F * 360/t Where: D = dollar
discount from face value, F = face value, T = days until maturity, 360 = days in a
year
US T-Bills are quoted on a bank discount basis
, CFA Level 1: Quant; Questions and Answers
100% Solved
holding period yield Correct answer-Holding Period Return = (ending
value/beginning value) - 1
EAY^t/365 - 1
total return an investor earns between the purchase date and the sale or
maturity date
effective annual yield Correct answer-EAY = (1 + HPY)^365/t - 1 where t is
days to maturity. Remember that EAY > bank discount yield, for three reasons:
(a) yield is based on purchase price, not face value, (b) it is annualized with
compound interest (interest on interest), not simple interest, and (c) it is based
on a 365-day year rather than 360 days. Be prepared to compare these two
measures of yield and use these three reasons to explain why EAY is preferable.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller TheeGrades. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $18.49. You're not tied to anything after your purchase.