Portfolio mnagement 1

CFA Level I Portfolio Management
#1

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:

  1. 0.18%.
  2. 0.55%.
  3. 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

#2

It asked for the (total) return over the holding period, not the annual return.

#3

ok Thanks for explaining

#4

My pleasure.