Volatility Drag Calculation - Quant Trader Interview Question
Difficulty: Medium
Category: Finance
Practice quant interview questions from top firms including Jane Street, Citadel, Two Sigma, DE Shaw, and other leading quantitative finance companies.
Topics: volatility, geometric-return, investment, trading-intuition
Problem Description
An investment experiences significant volatility. In the first year, it gains 20%. In the second year, it loses 20%. You start with an initial investment of 100 dollars. What is the final value of the investment after these two years, reflecting the impact of volatility?
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