Over the last three years, Sally the investor earned the following returns on her portfolio (assume that

Question:

Over the last three years, Sally the investor earned the following returns on her portfolio (assume that all dividends were reinvested in the portfolio, and are reflected in the stated returns): +35% (year 1), -20% (year 2), and +5% (year 3). What was Sally’s effective, annual, (compounded) return over this three year period? If Sally requires an annual return of 5% to be happy, is she happy?

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...