The returns for IMB over the last 3 years are given below.Assuming no dividends were paid,what was the 3-year holding period return? Given the following information:
Year 1 return = 10%,Year 2 return = 15%,Year 3 return = 12%.
A)12.3%
B)13.9%
C)15.8%
D)41.7%
E)46.5%

Question

Quizplus · Accepted Answer

The holding period return is calculated by multiplying the individual returns and taking the geometric mean of the product, then subtracting 1.

HPR = [(1 + 10%) × (1 + 15%) × (1 + 12%)] ^ (1/3) – 1

HPR = 1.417 - 1 = 0.417

HPR = 41.7%

Therefore, the correct answer is D) 41.7%.

The Returns for IMB Over the Last 3 Years Are