Hi In questions where we are asked to calculate the return over entire period, sometimes the result is calculated by - Multiplying (1+returns for each period) - 1 and sometimes it is calculated - Fund value final period/Fund start value - 1 When it is unclear which method to use should we just state our assumptions for calculation? Or is there a nuance to the way the questions are being asked? Thank you, Rachael
Tricky one - there is usually a clue in the question as to whether they want (say) a 3 year return, or the return in each of the 3 years. But if there isnt, its possible safer to do the individual year returns and then combine them. That is guaranteed to have the detail required. It might be slightly different due to reinvestment, but the examiner will award marks for both.
