Question: Please solve the problem like the example below Assume an investor deposits $114,497 in a professionally managed account. One year later, the account has grown

Please solve the problem like the example below Assume an investor

Please solve the problem like the example below

Assume an investor deposits $114,497 in a professionally managed account. One year later, the account has grown in value to $135,238 and the investor withdraws $25,689. At the end of the second year, the account value is $98,867. No other additions or withdrawals were made. Calculate arithmetic average of holding period returns during years 1 and 2. Round the answer to two decimals in percentage form. Please write % sign in the units box. Your Answer: Assume an investor deposits $112,986 in a professionally managed account. One year later, the account has grown in value to $132,070 and the investor withdraws $33,900. At the end of the second year, the account value is $94,129. No other additions or withdrawals were made. Calculate arithmetic average of holding period returns during years 1 and 2. Round the answer to two decimals in percentage form. Please write % sign in the units box. Your Answer: Step 1 Calculate portfolio holding period return during year 1: [($132,070 -$33,900) - $112,986 + $33,900]/$112,986 =($132,070 - $112,986)/$112,986 = 16.89% Step 2: Calculate portfolio holding period return during year 2: ($94,129 - ($132,070 -$33,900))/($132,070 -$33,900) = ($94,129 - ($98,170))/($98,170) = -4.12% Step 3: Calculate the arithmetic average over 2 years: [16.89% + (-4.12%) ]/2 = 6.39%

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