Calculate the annualized geometric and arithmetic returns, Ask an Expert

Finance

Sally is reviewing the performance of several portfolios in the family trusts. Trust A is managed by Wall Street Investment Advisors and Trust B is managed by LaSalle Street Investment Advisors. Both trusts are invested in a combination of stocks and bonds and have the following returns:

Trust A Trust B

year 1 15% 12%

year 2 10 15

year 3 -4 -2

year 4 25 20

year 5 -8 -5

a. find out the annualized geometric and arithmetic returns over this 5-year period.

b. Which manager performed the best, and is there a significant enough difference for Sally to move her money to the winning manager?

c. describe the difference between the geometric and arithmetic returns.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M944659

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