An Initial Investment of $10,000 Has a Value of $7,382

question 132

Short Answer

An initial investment of $10,000 has a value of $7,382 at the end of year 1. What is the rate of return for the first year?

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Definitions:

Covered Interest Arbitrage

An investment strategy where an investor uses the difference in interest rates between two countries to profit from currency exchange rate changes, using a forward contract to hedge exchange rate risk.

Profit or Loss

The difference between total revenues and total expenses of a business over a specific period of time.

Converted

This term usually refers to a change in the characteristics or use of an asset, such as converting a building for a different purpose or converting securities from one form to another, like bonds to stock.

LIBOR

London Interbank Offered Rate, a benchmark interest rate at which major global banks lend to one another.