Business
laikker
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If you had a fund with a Year 1 return of +30% and a year 2 return of -25%, what is this fund's a. average annual return for the two years and b. actual return for the two year period?

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FlorineCrayton

During Year 1, there's a return of +30% During Year 2, there's a return of -25% (A) The average annual return for two years is ... first we need to get the cumulative return. = (1 + 0.30) * (1 + -0.25)  = 2.05 Then divide it by 2 to get the average annual return = 2.05 / 2 = 1.025 So the average annual return is 1.025 (B) The Actual return for the two year period is = 30% + -25% = 5% So the actual return for two year period is 5%

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