Investments

Question 1

Steps for Solving for geometric mean/time-weighted return?

Answer 1

1. Determine % increase year over year if not provided.
2. (1+%change) of each year added together.
3. Answer is FV , N= # yrs , PV =1, find I

Question 2

What is the most important measure of bond risk?

Answer 2

Duration because it measures sensitivity to interest rate changes.