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An investment over 4 years has an HPR of +4% in the first year, -7% in...

An investment over 4 years has an HPR of +4% in the first year, -7% in the second, +3.75% in the third, and +2.15% in the fourth year. Calculate the average annual compound rate of return over this 4-year holding period.

Solutions

Expert Solution

HPR in year 1(r1) = 4%

HPR in year 2(r2) = -7%

HPR in year 3(r3) = 3.75%

HPR in year 4(r2) = 2.15%

Calculating the Average Annual Compound rate :-

Average Annual Compound Rate = 1.00620319 - 1

Average Annual Compound Rate = 0.6203%

jeff jeffy answered 2 years ago
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