Comparing annualized rates of return

In the last exercise, you saw that the annualized rate of return was 19.6%. That's pretty high! But since your portfolio consists of only 4 stocks, this high return is indeed possible as it is not very diversified. Let's compare the portfolio's annual rate of return, with that of the S&P500, which is much more diversified.

The value of the S&P500 between 1st of January 2015 and end of December 2018 has been made available. That's 4 years of data. You have full years this time, so use the year denomination in the formula for the annualized return. The data is stored under sp500_value.

Calculate the total return over the four years from the first and the last observation in sp500_value.
Calculate the annualized return from the total_return over four years.

Take Hint (-30 XP)

Exercise

Comparing annualized rates of return

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