The years 1995€”1999 were the five greatest consecutive years in the stock market in terms of performance. They were followed by 3 years of significant declines, and a recovery in 2003. The data below show the percentage annual returns for two Fidelity funds, Fidelity Growth (symbol = FDGRX) and Fidelity Aggressive Growth (symbol = FDEGX). Note that the performance of both funds mirrored that of the market, showing strong positive returns the first five years, followed by three years of negative returns,

a. Calculate the average performance for each fund for the nine-year period. Use the spreadsheet function {= Average(B2:B9)} where B2:B9 represents the cells with the first fund's annual returns.
b. Now calculate how much $ 10,000 invested in each fund at the beginning of 1995 would have grown to by the end of 1999, when the market was booming. To do this, construct two new columns, one for each fund, showing the decimal equivalent of the fund's return added to 1.0 (call this the return relative€”to hnd it, divide each return by 100 and add 1.0). For example, for FDGRX, the hrst entry would be 1.396. Then for each fund multiply $10,000 by each of the first five return relatives in turn. How much money would an investor in each fund have at the end of 1999? Which fund performed better up to that point?
c. Using the answer determined in (b), calculate the amount of money an investor would have in each fund at the end of 2003. Do this in a manner similar to (b), compounding the result you found at the end of 1999 by each of the four remaining return relatives.
d. What is the difference in ending wealth between the two funds, having started with $10,000 in each fund?
e. Now calculate the average annual total return (geometric mean) for each fund using the spreadsheet function { = geomean (D2:D9) ) assuming for example that the return rela­tives for one fund are in the cells D2:D9.
f. How does the difference in the average annua / totaf returns for each fund compare to the arithmetic averages for each over the 9-year period?

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