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In: Finance

A mutual fund advertises that average annual compound rate of returns for various periods ending end...

A mutual fund advertises that average annual compound rate of
returns for various periods ending end of December 2005 are as
follow :
10 years - 13%
5 years - 17%
2 years - 15%
1 year - 22%
Find the 5-year average annual compound rates of return for the
period January 1, 1996 to December 31, 2000, and nd the annual
rate of return for calender year 2004.

Solutions

Expert Solution

5 year average annual compound rate of return =((1+ 10 Year rate)^10/(1+5 year rate)^5)^(1/5)-1
=((1+13%)^10/(1+17%)^5)^(1/5)-1 =9.14%

jeff jeffy answered 2 years ago
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