Tom Decides to Begin Investing Some Portion of His Annual

question 35

Multiple Choice

Tom decides to begin investing some portion of his annual bonus, beginning this year with $6,000. In the first year he earns an 8 percent return and adds $3,000 to his investment. In the second his portfolio loses 4 percent but, sticking to his plan, he adds $1,000 to his portfolio. In this year his portfolio returns 2 percent. What is Tom's dollar-weighted average return on his investments?

• A).34%
• B)1.20%
• C)1.54%
• D)2.23%
• E)2.58%

---

Definitions:

Loans

Borrowed funds that must be repaid, usually with interest, used by individuals or entities to finance various activities or purchases.

Economic Growth

refers to an increase in the production of economic goods and services, compared from one period of time to another, typically measured by GDP.

DVCs

Digital Video Cameras, which are devices used to capture video in a digital format. If not related to digital video cameras, DVCs could be referring to a term not recognized without further context.

Corruption

The abuse of entrusted power for private gain, which can occur in both public and private sectors, undermining trust, inclusivity, and growth.