Calculate the Arithmetic Return of an Investment with fiVe Year

question 303

Multiple Choice

Calculate the arithmetic return of an investment with five year returns of 15%, 10%, 5%, (5%) and (10%) .

• A) 13.57%
• B) 11.38%
• C) 9.41%
• D) 5.23%
• E) 3.00%

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Definitions:

Cash Break-Even

It refers to the point at which a business generates just enough revenue to cover its operating expenses, indicating no profit or loss.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company’s operating income to its sales, indicating how a change in sales volume will impact operating income.

Forecasting Risk

The risk that a forecast may prove to be incorrect, potentially leading to financial losses or missed opportunities in financial markets.

Cost-Cutting Proposal

A plan or suggestion aimed at reducing expenses to improve profitability.