What Rate of Return in the Second Year of an Investment

question 74

Short Answer

What rate of return in the second year of an investment is required to break even after a 50% loss in the first year?

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Definitions:

Hermann Ebbinghaus

A German psychologist who is best known for his research on memory and the forgetting curve.

Sensory Storage

The shortest-term element of memory, which allows the retention of impressions of sensory information after the original stimuli have ended.

Constructive Processing

The way in which our memory reconstructs past events, often influenced by current knowledge, feelings, and thoughts.

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it, often referred to as the "I knew it all along" effect.