(i) You invest $135 in a mutual fund that grows 12 percent annually for three years. Then the fund experiences an exceptionally bad year and
(i) You invest $135 in a mutual fund that grows 12 percent annually for three years. Then the fund experiences an exceptionally bad year and declines by 25 percent. After the bad year, the fund resumes its 12 percent annual return for the next three years.
a. What is the average percentage change for the seven years?
b. If you liquidate the fund after nine years, how much do you receive?
c. What is the annualized return on this investment using a dollar-weighted calculation and using a time-weighted calculation?
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Authors: Melissa M. Smith, Glenda C. Williams, Larry Powell, Gary A. Copeland
1st Edition
0739145657, 978-0739145654
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