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Suppose you have 2 mutual funds whose annual returns are shown in the following table. Assume you invest $500 in each, and the proceeds from
Suppose you have 2 mutual funds whose annual returns are shown in the following table. Assume you invest $500 in each, and the proceeds from year 1 are reinvested in year 2 and so on.
- How much money do you accumulate in each fund after 5 years?
- For each fund, calculate the single annual rate which would yield the same return over the 5-year period.
Year | Fund X
| Fund Y |
1 | .10 | .28 |
2 | .14 | .17 |
3 | .02 | -.02 |
4 | .04 | .30 |
5 | .16 | -.10 |
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