You Own a Stock That Has Produced an Arithmetic Average

question 15

Multiple Choice

You own a stock that has produced an arithmetic average return of 8.6 percent over the past five years. The annual returns for the first four years were 16, 11, −19, and 3 percent, respectively. What was the rate of return on the stock in year five?

• A)−5.00%
• B)2.75%
• C)6.25%
• D)28.00%
• E)32.00%

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Definitions:

Working Capital Management

The process of managing a company's short-term assets and liabilities to ensure it has sufficient liquidity to run its operations effectively.