Question
Suppose you have 2 mutual funds whose annual returns are shown in the following table. Assume you invest $100 in each, and the proceeds from
Suppose you have 2 mutual funds whose annual returns are shown in the following
table. Assume you invest $100 in each, and the proceeds from year 1 are reinvested
in year 2 and so on.
1. How much money do you accumulate in each fund after 5 years?
2. For each fund, calculate the holding period return.
Year
| Year | Fund A | Fund B |
| 1 | .16 | .30 |
| 2 | .10 | -.10 |
| 3 | .14 | .28 |
| 4 | .02 | .17 |
| 5 | .04 | -.02 |
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
1 To calculate the amount of money accumulated in each fund after 5 years we need to use the compoun...
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Step: 2
Step: 3
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Fundamentals of Investments
Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey
3rd edition
132926172, 978-0132926171
