Question

if the 12-month continuously compounded return of a security is 9%, its associated 12-month holding period return is closest to:

Answer 1

The associated 12-month holding period return is closest to 9%.

Step-by-step explanation:

The associated 12-month holding period return is closest to 9%.

The continuously compounded return can be converted to the holding period return using the formula:

Holding Period Return = er - 1

Where r is the continuously compounded return rate.

Therefore, for a 9% continuously compounded return rate, the holding period return would be:

Holding Period Return = e0.09 - 1

Calculating the value of the expression, the closest value is approximately 0.0935 or 9.35%.