A portfolio manager generates a 5% return in 2008,a 12% return in 2009,a negative 6% return in 2010,and a return of 2% (non-annualized)in the first quarter of 2011.The annualized return for the entire period is closest to:
A)3.05%
B)3.25%
C)3.50%
D)3.77%

Question

Quizplus · Accepted Answer

To calculate the annualized return for the entire period, we first need to find the total return for the period. We can do this by multiplying the returns for each year:

(1.05) * (1.12) * (0.94) * (1.02) = 1.064584

Next, we can raise this to the power of 1/3 (since we have 3 years and 1 quarter) to find the average annual return:

(1.064584)^(1/3) = 1.012556

Finally, we subtract 1 and convert to a percentage to find the annualized return:

(1.012556 - 1) * 100% = 1.2556% = 3.77% (rounded to two decimal places)

Therefore, the closest answer choice is D (3.77%).

A Portfolio Manager Generates a 5% Return in 2008,a 12