Solve the Problem. -You Have Money in an Account at an APR of an APR

question 262

Multiple Choice

Solve the problem.
-You have money in an account at an APR of 5% compounded annually. To the nearest year, how long will it take for your money to triple?

• A)23 years
• B)14 years
• C)32 years
• D)18 years

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Definitions:

EAR

Effective Annual Rate, the actual return on an investment when compounding interest is taken into account over a one-year period.

Geometric Mean Return

The geometric mean return, for investment performance, is the compound annual growth rate (CAGR) of an investment, calculated by taking the nth root of the total returns, where n represents the number of periods.

Treasury Bonds

U.S. government debt securities with a maturity of more than ten years, offering fixed interest payments.

Holding-period Return

The cumulative return gained from owning an asset or collection of assets over a specific timeframe, usually represented as a percentage.