n NISM Certifications
V-A NISM Series V-A
Medium

Calculate the Average holding period if the portfolio turnover ratio is 25 percent.

Practice question from Nism VA Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    25 months

  2. B

    48 days

  3. C

    40 months

  4. 4 Years

    Correct answer

Why this is the answer

The formula for Average Holding Period is: \[ \text{Average Holding Period} = \frac{12 \text{ months}}{\text{Portfolio Turnover Ratio}} \] With a portfolio turnover ratio of 25% (or 0.25), the average holding period would be: \[ \frac{12}{0.25} = 48 \text{ months} = 4 \text{ years} \]

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