Question
You invested $2,000 in a mutual fund at the end of 2017. Over the next three years, the returns on the fund were as follows:
You invested $2,000 in a mutual fund at the end of 2017. Over the next three years, the returns on the fund were as follows: Year 2018 2019 2020 Return (%) 7% 12% -5% a) How much money ($) do you have by the end of 2020 assuming you havent made any changes to your allocation? b) What is the geometric average return of the mutual fund? What is its arithmetic average return? c) At the end of 2020, your friend also considers investing in the fund and asks you how much is the average return she can expect to earn based on the historical returns. What do you tell her?
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