You short-sell a stock and currently have 1/3 of the stock's value as collateral. Over the next 8 months, the stock that you shorted has a return of -23%. What is the EAR of your investment?

The easiest way to do this one is to start with the multiplier, then apply it to the return on the asset to get the return on your equity, then annualize that return.

The correct answer is: 1.20