AAFM Exam GLO_CWM_LVL_1 Topic 2 Question 94 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam

Question #: 94
Topic #: 2

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.

A40%

B36.64%

C80%

D96%

Show Suggested Answer

Suggested Answer: C

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

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Dominque

2 months 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 days ago

Rahul: It's actually 40%.

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Louvenia

16 days ago

Demetra: I think it's 36.64%.

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Marsha

20 days ago

Leontine: The annualized percentage change is 40%.

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Noel

2 months 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

9 days 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

21 days 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

1 months ago

That's correct! So, it would be (1.2)^(2) - 1, which equals 1.44 - 1.

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Yolande

1 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

2 months 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

2 months 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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