alleryStart learning →A fund gains 20 percent in year one and loses 20 percent in year two. What is its overall two-year result?
ANo change
BA gain of 4%
CA loss of 2%
DA loss of 4%
Answer & Solution
Correct answer: D. A loss of 4%
Each sub-period return applies to the value at its start, so 1.20 x 0.80 = 0.96, a 4% loss.
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