justin88

bannisja Wrote:
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> pimpin has the formula. i just quick math did to
> 1.66666666, no?
> again, highly doubt it'll ever show up, but you
> just never know what stupid random stuff may find
> its way in 3 days.

Yes the correct formula according to CFAI is:

gain-to-loss = (# up months / # down months) * (avg up month return / avg down month return)

Here's my addition to the CFAI formula:
Rearranging, this becomes:
gain-to-loss = (# of up months * avg up month return) / (# of down months * avg down month return)

Since avg monthly return = sum of monthly returns / # of months,

gain-to-loss = (sum of up month returns) / (sum of down month returns)

So the answer here should be (10 / 6 ) = 1.667



Edited 1 time(s). Last edit at Wednesday, June 1, 2011 at 12:57PM by LobsterBoy.