T12.20 Chapter 12 Quick Quiz
1. How are average annual returns measured?
2. How is volatility measured?
Assume your portfolio has had returns of 10%, -7%, 28%, and
-11% over the last four years. What is the average annual return?
Your average annual return is simply:
[.10 + (-.07) + .28 + (-.11)]/4 = ________% per year