If the total rate of return is multiplied by 1/N,where N is the number of years for which the investment was held,the result is the
A)serialized rate of return.
B)annualized rate of return.
C)tax-free rate of return.
D)capitalized rate of return.

Question

Quizplus · Accepted Answer

The annualized rate of return is calculated by multiplying the total rate of return by 1/N, where N is the number of years the investment was held. This gives an average annual return, which can then be compared to other investments or used to project future returns. Choice A, serialized rate of return, is not a commonly used term in finance. Choice C, tax-free rate of return, would only apply to investments in tax-free accounts such as certain municipal bonds or Roth IRAs. Choice D, capitalized rate of return, refers to the rate at which the income generated by an investment is translated into an increase in the value of the asset.

If the Total Rate of Return Is Multiplied by 1/N,where