To convert a nine-month percentage change of 15% into an annual rate, which method is correct?

• A. Multiply by 12
• B. Divide the total percentage by the number of months and then multiply by 12
• C. Double it
• D. Add 3% per year

Answer: (B)

To annualize a return observed over a portion of the year, you assume the same rate applies each month and then scale up to a full year. A 9-month change of 15% gives a monthly rate of 15% ÷ 9 ≈ 1.6667% per month. Extending that evenly for 12 months yields 1.6667% × 12 ≈ 20% per year. This simple, linear approach is why dividing the total change by the number of months and then multiplying by 12 is the correct method.

Multiplying by 12 would imply the 15% covered a full year already; doubling it would produce a larger annual figure not tied to the nine-month period; and adding a flat 3% per year isn’t grounded in the given change.