an investor calculated the effective annual return on his 4

an investor calculated the effective annual return on his 4 month investment at 12.68%. what was the investors annual percentage rate of return and the holding period return?

Solution

Effective Rate of Return 12.68% Effective Annual Rate = (1+(r/n))^n)-1*100 12.68% = (1/r/4)^4)-1 APR = n x (1 + EAR)1/n – 1 Annual percentage of rate of return = (4 x((1+12.68%)^(1/4))-1) 12.12% Holding Period Return = 12.12%/12 x 4 Months 4.04%