The return on an investment expressed on an annualized basis is called the
A) Earned return
B) Leveraged return
C) Holding-period percentage return
D) Annual percentage rate
E) Effective annual return

Question

Quizplus · Accepted Answer

The effective annual return takes into account the effect of compounding on an investment and gives a more accurate picture of the return on investment, making it the best choice. The other options are either too broad in definition or do not take into account the effect of compounding.

The Return on an Investment Expressed on an Annualized Basis