Ho ho


"3. Rates of Return for Your Portfolio and for the Market Indexes

Compute the holding period rate of return on your portfolio for the holding period of the project and compute the corresponding annualized compound rate of return for your portfolio.

Compute the holding period return and the annualized rate of return for the two market indexes?

Compare the performance of your portfolio with that for the market as a whole.

[In the past way too many students have screwed up on this part. By the end of 422 you should be able to do these calculations in your sleep. If you don’t get this right it will cost you serious points; you will have an X grade; and I will hound you until you do it right. In computing the annualized compound rate of return, be sure to use the standard time value of money relationship, solved for r. Look it up if you aren’t certain! Don’t use a simple interest formula!]"