In one year, a security market index has the following quarterly price returns:
I tried annualizing the reurn (1+Quarter return/4)4 =(1+Annual Return) .. then added all the annual returns… I got the answer 10.2%. But this is a time consuming process to solve.
The solution in kaplan is (1+Qr1)(1+QR2)(1+QR3)(1+QR4)-1 …. My question is when do I use this formula? and when do I use Geometric mean to estimate the return?
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