I'm struggling with the differences between when we should use the formula for expected accumulated value and the accumulated value at the mean of return. Question 6(i) asks for the mean accumulation, which I took to mean the expected accumulated value, but the solution for this question used the mean rate of return. When should I use each method?
Hi. The calculation of the mean accumulation (ie the average fund value at the end of the projection) uses the mean rate of return (ie the average rate of investment return over each period). So in answer to your question, both items are required for this question. Hope that helps.
