The Investment Company Institute reported in its Mutual Fund Fact Book that the number of mutual funds increased from 410 in 1990 to 857 in 2000. What is the geometric mean annual percent increase in the number of funds?
A) 1.12
B) 7.65
C) 19.41
D) 48.66

Question

Quizplus · Accepted Answer

We can use the formula for geometric mean annual percent increase, which is:

[(Ending Value/Beginning Value)^(1/number of years)] - 1

Plugging in the given values, we get:

[(857/410)^(1/10)] - 1 = 0.0765

Multiplying by 100 to get a percentage, we get a answer of 7.65. Therefore, the best choice is B.

The Investment Company Institute Reported in Its Mutual Fund Fact