The S&P/ASX 200 Index Delivered a Return of 15%, 20

question 42

Multiple Choice

The S&P/ASX 200 index delivered a return of 15%, 20%, 20%, -25% over four successive years. What is the arithmetic average annual return per year?

• A) 6.5%
• B) 7.5%
• C) 8.5%
• D) 9.5%

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Definitions:

Agency Problem

In corporations, managers are the agents of stockholders and are often able to take advantage of the relationship by diverting corporate resources to their own use. Excessive pay is the primary example. The general situation is described as the agency problem. Costs associated with controlling the agency problem are agency costs.

Ownership

The legal right or title to an asset or property, with the authority to use, sell, or lease it as the owner sees fit.

Widely Dispersed

Refers to assets, individuals, or entities that are spread out over a large geographic area or among a wide range of categories or types.

Socially Responsible Investing

Investing strategies that consider both financial return and social/environmental good to bring about social change.