n NISM Certifications
X NISM Series X
Medium

Which measure provides the appropriate annual return over multiple years?

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Arithmetic mean return

  2. Geometric mean return

    Correct answer

  3. C

    Point-to-point return

  4. D

    Holding period return

Why this is the answer

The geometric mean accurately reflects annualized returns over multiple periods, accounting for compounding effects.

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