How would one go about annualizing past quarterly performance numbers. say you had returns of 2000 q1 = 5.65% 2000 q2 = 6.33% 2000 q3 = 4.32% 2000 q4 = 2.36% 2001 q1 = 3.23% 2001 q2 = 3% 2001 q3 = 4% 2001 q4 = 2% In order to calculate the 2yr annualized gain for this particular asset would you use the geometric mean? This will most definitely not be asked in the test but it is a question that has been bugging me for quite some time now.
year 2000: (1+in_q1)*(1+in_q2)*(1+in_q3)*(1+in_q4) - 1 = in2000
that is what i came out with for yearly return for 2000 but is there a way to do the 2-yr annualized return?
I don’t know when will you encounter that. but 2 year annualized will be: sqrt((1+2000)*(1+2001)) - 1 = annualized
Thanks