The internal rate of return is a less meaningful measure of an investment's performance than holding period return if the holding period is other than 1 year.

Question

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The internal rate of return (IRR) is a comprehensive measure that accounts for the time value of money, cash flows, and the duration of the investment, making it meaningful for evaluating an investment's performance over periods other than 1 year, unlike the holding period return which does not account for the time value of money.

The Internal Rate of Return Is a Less Meaningful Measure