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AAFM GLO_CWM_LVL_1 Exam - Topic 2 Question 94 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam
Question #: 94
Topic #: 2
[All GLO_CWM_LVL_1 Questions]

Rahul had invested in an open ended Mutual Fund when the NAV of the fund was Rs. 10. After 6 months the NAV was Rs. 12. Calculate the annualized percentage change in the fund ignoring all charges.

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Suggested Answer: C

by Whitley at Oct 18, 2024, 03:04 AM

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Haley
5 months ago
Totally agree, 40% sounds right!
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Nada
5 months ago
Are we sure about that calculation? Seems off to me.
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Abel
5 months ago
I thought it would be higher than that!
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Noah
6 months ago
That's a 20% return for 6 months, so annualized is about 40%.
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Elmer
6 months ago
The NAV went from Rs. 10 to Rs. 12 in 6 months.
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Beckie
6 months ago
I thought the annualized return would be higher since the NAV increased so much, but I can't recall the exact calculation method.
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Selma
6 months ago
I feel like I might be overthinking it. Is it just the percentage change multiplied by 2 for the annualized figure?
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Ailene
6 months ago
This seems similar to a practice question we did on mutual funds. I think the annualized return is around 36.64%.
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Carma
7 months ago
I remember we calculated annualized returns in class, but I'm not sure if I got the formula right for this one.
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Luis
7 months ago
I've got this! The annualized percentage change is calculated as (final NAV / initial NAV)^(1/t) - 1, where t is the time period in years. In this case, t = 0.5 years, so I just need to plug in the values.
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Claribel
7 months ago
Hmm, I'm a bit confused on the formula to use here. Is it the simple percentage change formula or do I need to factor in the time period as well?
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Jaime
7 months ago
Okay, let me think this through step-by-step. The initial NAV was Rs. 10 and the final NAV after 6 months was Rs. 12. I need to calculate the annualized percentage change.
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Domonique
7 months ago
This seems like a straightforward calculation of the annualized percentage change in the fund's NAV. I'll need to use the formula for annualized return.
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Dominque
1 year ago
I'm impressed by Leontine's logical approach. Seems like the correct answer is 40%, but I wonder if Demetra forgot to carry the one or something?
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Janet
10 months ago
Rahul: It's actually 40%.
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Louvenia
11 months ago
Demetra: I think it's 36.64%.
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Marsha
11 months ago
Leontine: The annualized percentage change is 40%.
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Noel
1 year ago
I'm inclined to go with option B, 36.64%. The formula for annualized percentage change can be a bit tricky, but I think I've got it right this time.
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Sueann
10 months ago
Actually, the correct answer is option D, 96%. You need to annualize the 44% by multiplying by 2, not the final result.
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Noel
11 months ago
That gives us 0.44, which is 44%. But since we need the annualized percentage change, we need to multiply by 2 to get 88%.
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Lorrine
11 months ago
That's correct! So, it would be (1.2)^(2) - 1, which equals 1.44 - 1.
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Yolande
12 months ago
I think the formula for annualized percentage change is (NAV final / NAV initial)^(1/n) - 1, where n is the number of periods. So, in this case, it would be (12/10)^(1/0.5) - 1.
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Evette
1 year ago
Hmm, I got the same result as Leontine. 40% seems like the correct answer. Though I'm curious, did Demetra invest in a mutual fund or a crystal ball?
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Leontine
1 year ago
Okay, let me think through this step-by-step. If the NAV went from 10 to 12 in 6 months, that's a 20% increase. Annualizing that would give 40%, which is option A.
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Renato
1 year ago
I also calculated it and got the same answer, so I think we are correct
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Jolene
1 year ago
I agree with Stacey, the annualized percentage change can be calculated using the formula [(NAV final / NAV initial)^(1/n) - 1] * 100
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Demetra
1 year ago
The annualized percentage change seems to be quite high. I'm not sure if I'm missing something in the calculation.
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Tawanna
11 months ago
D) 96%
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Carlee
12 months ago
C) 80%
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Goldie
12 months ago
B) 36.64%
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Myra
12 months ago
A) 40%
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Stacey
1 year ago
I think the answer is B) 36.64%
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