Exercise

# Annualizing portfolio returns

Suppose you invested $101 at the beginning of 2015 in a portfolio. By the end of March 2018, you wonder how your portfolio has performed over time, and whether it is as good as another portfolio which started trading mid-2016. What performance metric do you look at? Well, the annualized return of course!

So let's calculate the **annualized rate of return** for your portfolio. Since our sample covers 3.2 years, let's use the monthly denomination in the formula for annualized returns. The number of months is already given under `months`

.

Available are the data on portfolio returns under `pf_returns`

, as well as as a separate series `pf_AUM`

containing the portfolio's *value*, or assets under management (AUM). Good luck!

Instructions 1/2

**undefined XP**

- Calculate the total rate of return from the first and last observation stored in the portfolios value series
`pf_AUM`

. Use indexing again to take the last and first observation from the series.