Angie owns a portfolio which has an expected annual return of 9.76%. What is the 2-year expected return on her portfolio?
A)13.80%
B)19.52%
C)23.40%
D)27.60%
E)29.10%

Question

Quizplus · Accepted Answer

To calculate the 2-year expected return, we need to compound the annual expected return for two years using the formula:
(1 + Annual Return)^2 - 1

Plugging in the given values, we get:
(1 + 0.0976)^2 - 1 = 0.1952 or 19.52%

Therefore, the 2-year expected return on Angie's portfolio is 19.52%. The correct answer is B.

Angie Owns a Portfolio Which Has an Expected Annual Return