A Problem with a Portfolio Return Computation Is: ________

question 35

Multiple Choice

A problem with a portfolio return computation is: ________.

• A) the underlying assumption is that all cash payments and inflows are made and received at the beginning of the period
• B) we have to rely on the formula that is able to adjust portfolio returns with the same time horizon.
• C) if two investments have the same return, but one investment makes a cash payment early and the other late, the one with early payment will be overstated
• D) we cannot rely on the formula to compare return on a one-month investment with that on a 10-year return portfolio.