Question

In: Finance

Your investment portfolio has the following annual returns over the last three years. Year 1: -13%...

Your investment portfolio has the following annual returns over the last three years.

Year 1: -13%

Year 2: 6%

Year 3: 19%

The arithmetic average of these returns is:  %

The time-weighted annualized return (i.e. geometric average) of these returns is:  %

Please enter your answer with TWO decimal points.

Solutions

Expert Solution

Year Return
1 -13%
2 6%
3 9%
Total 2%
The arithmetic average of these returns = 2%/3
= 0.67%
The time weighted annual return = 4%
(19%*/3+6%/3-13%/3)

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