In the companion website to this book you’ll find the exercise Excel file for this chapter. This file gives data for three mutual funds. Compute the discrete annual returns for each fund and then use an array function to compute the compound annual return over the period. Recall that discretely compounded, the return in year t is (Fund valuet/Fund valuet −1) − 1.

If the returns were continuously compounded, then the year t return would be Ln(Fund valuet/Fund valuet −1).