What was the fund's compound annual growth…

What was the fund's compound annual growth rate over the three years?

Question 47

MediumOriginal question

A mutual fund's NAV was ₹50 at the start of 2022, ₹60 at the end of 2022, ₹54 at the end of 2023 and ₹72 at the end of 2024. (Take $(1.44)^{1/3} = 1.1292$ .)

What was the fund's compound annual growth rate over the three years?

12.92%Correct answerYour answer14.44%Correct answerYour answer14.67%Correct answerYour answer44%Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

$CAGR = \left(\frac{72}{50}\right)^{1/3} - 1 = (1.44)^{1/3} - 1$ .
$1.1292 - 1 = 0.1292$ , about 12.92% a year.

Worth noting

14.44% averages the three yearly returns, 20%, −10% and 33.33%; an average overstates growth when returns swing.

Concept: CAGR from the start and end values
Typical timeTypical: 120 s
Your timeYours: —

The rule this testsRate of return and CAGR

Practise this chapter →

Ten questions from EMI, CAGR & Depreciation, at your own pace.

Practise this chapter →

Ten questions from EMI, CAGR & Depreciation, at your own pace.

What was the fund's compound annual growth rate over the three years?

Question 47

Explanation