CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

An investor invested $10,000 in an open-end mutual fund 90 days ago. Today his investment is worth only $9,874. What is his annualized rate of return?
A. -5.04%
B. -5.01%
C. -4.83%
Explanation: The rate of return is (9,874 - 10,000)/10,000 = -1.26%. The period is 90 days.

(1 - 0.0126)(365/90) -1 = -5.01%

User Contributed Comments 4

User Comment
ksnider EAY = [(1 + HPY)^(365/t)] - 1
dipu617 BAII Plus:

P/Y=365

FV=9874
PV=-10000
N=90
[CPT]
I/Y=-5.01%
nrk65 Hi Dipu, when entered in baII plus the value of I/Y comes as 5.142%
NOBAN the steps are -
determine the holding period returns - 9874-10,000/10,000. = -0.0126.
Note - to arrive at the annualized rate, 1 is added to -0.0126= 0.9874^365/90. Note that 1 must be deducted to finally arrive at the annualized return. Hence 0.9499 -1 =-0.0501
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