An analyst obtains the following annual rates of return for a mutual fund:

Year |
Return (%) |
---|---|

2008 | 14 |

2009 | −10 |

2010 | −2 |

**Q.** The fund’s holding period return over the three-year period is *closest* to:

- 0.18%.
- 0.55%.
- 0.67%.

#### Solution

**B is correct.** [(1 + 0.14)(1 − 0.10)(1 − 0.02)] – 1 = 0.0055 = 0.55%.

I calculated the GM . why calculating GM is not the correct method